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RENEWABLE ENERGY INVESTMENT STRATEGIES IN VIETNAM

June 2011

INTRODUCTION TO ANPHA CAPITAL

Formed in 2006, raised two funds which listed on Frankfurt Stock Exchange in 2007, management spin-out in 2008. First Vietnamese fund management company to sign the United Nation Principles of Responsible Investment (UN PRI). Has since 2009 focused on Renewable Energy. Managed by a team of international and local professionals with outstanding track records , significant assets management and operation experience.

RENEWABLE ENERGY

ENERGY EFFICIENCY

WHY RENEWABLE ENERGY IN VIETNAM?


Growing awareness growing market Renewable Energy awareness is growing in Vietnam. This is in turn effecting the Governments policies which are progressing very rapidly.

Proprietary Deal flow

The investment opportunities are sourced through Anpha Capitals extensive network in the Renewable Energy space in Vietnam. Most clean energy industries in Vietnam are in a nascent stage. This gives the opportunity for high returns, but also increases the risk profile. The investment manager will be more active in the operations of the investment than in a traditional Private Equity investment. Vietnam has for over 10 years had economic growth rates of 7-8% and changed dramatically. The development in Renewable Energy, but also Energy Efficiency and Waste and Water Treatment is however lagging. The management team has experience with young companies and start ups. The management team will be active in the operations of the investee companies. The Funds has among its advisors environmentally very knowledgeable and very respected individuals, with influence on environmental opinions in Vietnam.

Nascent Industry High Returns

Strong Case for Development of Vietnam

Entrepreneurial Management Team

Advisors

WHY RENEWABLE ENERGY IN VIETNAM?

Positives Bio fuels (Ethanol, Bio diesel) Wind Exportable

Negatives Food Vs fuel

Proven technology

Regulatory

Biomass

Proven technology

Transportation Efficiency

Hydro

Cheap

Social issues

Solar

Sustainable

Cost

ENERGY EFFIECIENCY

1.

Does it make sense with low electricity cost?

2. -

Different segments Residential/ Commercial Industrial Municipal projects

PIPELINE

The following pipelines are examples of our investee candidates

PIPELINE - BIODIESEL
Transaction Details
Sector
Background Capital raise Ownership Instrument Key terms Expected cash-on-cash x Holding period Exit Sector Fundamentals Clean energy is fully supported by the government in terms of tax deduction, raising public awareness, developing distribution infrastructure. The technology used in producing biodiesel from fish oil is available at low cost. There is about 145,000-260,000 tons of fish oil, input material for biodiesel production, available in Mekong Delta. Fish oil price is cheap because it is extracted from waste of fish processing industry. The demand of diesel is estimated at 8.74 million tons in 2010 and increased to 11.14 million tons in 2015. The biggest market of diesel is Ho Chi Minh City area, near the Mekong Delta, minimizing the transportation cost.

Investment Thesis
Renewable Energy
Opportunity to gain exposure in a leading firm in the biodiesel market US$12 Mn 40% maximum Convertible bond/Straight equity No lockup 2.3x 5 7 years Listing/Trade Sale Highlights Exposure to pioneer position opportunity created by potential and encouraged industry. Abundant feedstock supply at low cost Flexible supply sources thanks to multi-feedstock capability technology Small foot-print factory to startup, hence low investment cost The plants location is very near target market. Good access to seaports and highways to minimize logistics cost.

The demand of biodiesel increases significantly as one the best substitutions for mineral diesel
Board and management team has almost 10 years of biodiesel manufacturing experience Ethanol E5 is already a proven sales success Risks

Operating in a new industry in Vietnam


The customers are unfamiliar with biodiesel at the early stage The selling price is possibly controlled by the government Epidemic diseases and weather may affect feedstock supply

PIPELINE - SOLAR POWER PANELS


Transaction Details
Sector Background Capital raise Ownership Instrument Key terms Holding period Expected cash-on-cash x Renewable Energy Opportunity to invest into the first green energy equipment manufacturer in Vietnam US$18 Mn 49% maximum Straight equity, convertible bond 10% coupon, special rights No lockup 5 7 years 3.0x

Investment Thesis
Highlights
Exposure to long term development of Green Energy in Vietnam Be the first pioneer company in the industry in Vietnam, take the largest market share while promoting clean and sustainable energy, reduce toxic gas emission Led by experienced founder with deep know-how knowledge Geographical advantage for solar power projects Tax incentives from Government Potential IRR is over 20% for 7 years Risks Hard to negotiate a future Feed-in-tariff (FiT) with EVN Operational risk in the initial stage as employees are inexperienced with the new technology and equipment Unknown target market since domestic demand does not justify cost while regional markets (China, Laos, Cambodia, Thailand) are largely unknown and European/American markets are dominated by bigger firms Most equipments and production chains will be imported, expose the company to exchange rate risk

Exit
Sector Fundamentals

Listing/Trade Sale

There is a growing global concern about green-house effect and toxic gas emission level. Fast growing sector Global accumulative solar photovoltaic (PV) electricity market is expected to grow at 15% (Energy savings Weekly). Outside Europe, Asia is becoming a major demand centre as India and China announced plans to increase their solar power capacities to 20 GW/each by 2020

Potential growth for renewable electricity in Vietnam Vietnam needs to increase its supply capacity by at least 3 times of current capacity to meet demands in 2020

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PIPELINE ENERGY EFFICIENCY


Transaction Details
Sector Background Capital raise Ownership Instrument Key terms Holding period Expected cash-on-cash x Exit Sector Fundamentals The electricity production and consumption gap is getting bigger and puts pressure on electricity price The fast urbanization and the presence of big buildings in large cities create a chance for energy efficiency business. Instead of flowing into capital-intensive energy plants, investments can be better used by financing many relatively small energy efficiency projects The rising electricity price makes energy efficient solutions be more economic sound options for both office buildings and residential apartments There is not yet a comprehensive consultancy and execution solution found in Vietnam so the competition for projects is relatively low Energy Efficiency Opportunity to invest in the brand new and potential energy efficient field US$2-3 Mn 51%-100% 100% Debt No lockup 4 5 years 2x Trade Sale

Investment Thesis
Highlights
A huge potential market that has not been covered sufficiently Two-three small size projects which require 0.5-1.5 million USD to retrofit buildings with more efficient energy systems The building owner gets new lighting and ventilation equipment for free. The benefit from energy efficiency will be shared between the building owner and the fund The growth prospect comes from both geographic expansion of customer base and the increasing return from energy saving bills IRR=15% expected Short pay-back period of 3-4 years

Governments commitment to rising energy prices

Risks Current energy prices are relatively low which makes replacement of existing energy system less attractive There are not many big buildings with energy bills high enough Tenants or apartments owners may refuse to change Risk of energy prices not rising in expected horizon time of investment

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MANAGEMENT TEAM

Bui Cong Giang CEO


Current Founding Chairman of A.N.P.H.A Corporation Prior Deputy General Director of Him Lam Group Member of BOD of Keppel-Agtex JV Investment and R&D Manager of Agtex Corp. Executive Masters degree in Finance & Banking in Switzerland Postgraduate in International Marketing from the University of Padova in Italy

Thomas Jakobsen - Head of Sustainability


Current Founding Chairman of Gate To Asia a Vietnam focused ESG consulting company

Prior Vice Director of Tropicdane Group in Vietnam Managing Director of Bowers and Wilkins Loudspeaker manufacturer in Denmark M.Sc in Economics and Business Administration from University of Aarhus in Denmark MBA program at Katholieke Universiteit Leuven in Belgium

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ADVISORS

Professor Doctor Chu Hao


Professor Chu Hao currently the Director of Tri Thuc (Knowledge Publisher), a reputable publisher in Vietnam, focus on the development of knowledge for the community Former vice Minister of Science and Technology Department and Former Vice President of National Information Technology Program Former President of National Micro Technology Department Prof. Chu Hao has extensive working experience in various fields that he has collected during over 20 years researching and working overseas and universities teaching in several countries (China, Russia and France) Former Management Board Member of Hoa Lac high tech industrial zone. Member of Presidium of VUSTA (Vietnams Union of Science and Technologies Associations) The Intels Bridge into Saigon Hitech Park, Vietnam

Luu Duc Khanh


Proven leader in the banking and financial services space in Vietnam CEO of the Sovico Holding Group which manages development projects across Vietnam Prior to that, he was the CEO of An Binh Bank, Deputy CEO of Techcombank, Director of Strategic Development of HSBC and Director of Vietcombank Mr. Khanh holds a MBA in International Business from New England, Australia and a BA in International Commerce from Ho Chi Minh City University

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CONTACT

Thank you
Thomas Jakobsen - Head of Sustainability thomas.jakobsen@anphacapital.com +84 (0) 903 757 565 ANPHA CAPITAL FUND MANAGEMENT COMPANY Address : 7 Vo Van Tan Street, District 3, Ho Chi Minh City, Vietnam Phone : +84 (8) 3825 8107 Fax : +84 (8) 3825 8108 Website : www.anphacapital.com

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