Cornerstone Conversation: Andrew de Pass, Senior Advisor Greentech Capital Advisors

Andrew de Pass, senior adviser Greentech Capital Advisors

We recently spoke to R. Andrew de Pass, a senior adviser with , the first investment bank focused solely on the alternative energy and clean technology market. Before joining Greentech, de Pass spent 14 years at Citi, where starting in 2005, he headed the bank’s Sustainable Development Investments (SDI) unit. Given the increasing activity in the cleantech and energy sectors, this is an exciting time to be a green banker. After a tough 2009, investments, both public and private are coming back, ensuring that cleantech companies will require a steady flow of advice, which is where de Pass and Greentech Capital step in.

Green Energy Reporter:
Why invest in clean energy and sustainable industries?

Andrew de Pass: There is a fundamental need to change how we as a planet use energy, how we manage our water resources or how we manage our waste. The path we’re on is not sustainable. These issues are driving investments by governments and the private sector supporting technologies that can provide solutions to energy-related problems. This heightened awareness of climate change has helped create a market that just a few years ago hardly existed. These days, cleantech investors are not backing solar or wind companies or sustainable technology companies just to be good corporate citizens. Medium to long-term, there are real opportunities to make money by investing in solutions that will have a part in resolving the environmental issues affecting us.

G.E.R.: You’re not your average environmentalist. How did you get started in the sector?

AdP: No, I am not.  I started at Morgan Stanley as a mergers-and-acquisitions banker working on deals across various industries. In 2005 at Citi, where at the time I had been for about 9 years, I was asked to put together a business unit to invest in companies involved in renewable energy or sustainable development. I was at first a little skeptical and said that I didn’t want to do charity work! But then I looked into it, did some research and realized that there were lots of opportunities in a sector that at the time was still a few years away from the boom it’s experiencing now. It became obvious that sustainable development and renewable energy was a potentially huge, largely untapped market. Over the next four years, my team and I, using Citi’s own capital, invested in a number of businesses that we felt offered solutions to the issues I mentioned earlier: global warming, declining water resources.

G.E.R.: Did that thinking motivate the launch of Greentech Capital Advisors?

AdP: Yes, the issues have obviously not changed. I was asked by Jeff McDermott last spring to join the firm. At the time, because of the financial crisis, Citi had shut down SDI. Greentech launched as an advisory boutique investment bank, but all along our plan has been to become a one-stop shop, offering clients M&A and project finance advisory and private placement services. By next year, we’re also planning to launch a private equity fund that would invest alongside our clients as a late-stage investor backing cleantech companies and companies across the whole green/sustainable space.

G.E.R.: Is serving a single industry a sustainable model for Greentech Capital?

AdP: The model on Wall Street is shifting away from the large conglomerates in favor of smaller, tailor-made advice. Specific to Greentech Capital, we strive to become what Allen & Co. has been to the media industry, but for the green sector. We’re entering a relatively new market that could potentially reach $6 trillion, which gives us plenty of room to grow.

G.E.R.: There have been a few notable M&A transactions over the past year, some you’ve been involved in. Is that trend set to continue over the coming year?

AdP: In 2010 and 2011, I expect to see more buyouts of small cleantech ventures by larger companies. Cleantech businesses are very capital intensive, and at a time when funding remains difficult to access, merging with a company with a larger balance sheet makes sense. In terms of government funding, and in particular the cash grants, I expect the Department of Energy and Congress to extend them past their 2010 deadlines.

G.E.R.: Does the U.S. have a long-term energy policy?

AdP: No, this country does not have a long-term energy policy. There have been some key measures implemented by this and previous administrations, like the direct cash grants or the extension of the production and investment tax credits, which have helped untap a flow of investments. But those remain temporary measures. A long-term energy policy would require an energy and climate change law with a cap-and-trade provision. A national Renewable Electricity Standard would also be a big step toward establishing a long-term policy.  Specific to cap-and-trade it would help unlock new capital and more importantly, provide investors more certainty, which would help U.S. [renewable energy] companies become more competitive.

Interview conducted and condensed by G.E.R.

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