ALTERNATIVE INVESTMENTS: OPPORTUNITIES IN ENERGY INVESTING

Transcription

1 ALTERNATIVE INVESTMENTS: OPPORTUNITIES IN ENERGY INVESTING Webinar - June 12, 2014 Panelists Marietta Moshiashvili TIAA-CREF Frank Conley Freepoint Commodities Thomas Warren Sutherland David McIndoe Sutherland

2 Presentation Overview Introduction Current and Developing Alternative Investments the investor s perspective Teaming with Investors the sponsor s perspective Bringing the Deal Together the lawyer s perspective Questions and Answers Sutherland Asbill & Brennan LLP

3 Changing Market Place Institutional investors have made alternative investments in many ways Across several sectors agriculture, softs, real-estate, etc. Multiple modes of investing ETFs, direct investments, participations, etc. Energy has always been a sector of interest Capital intensive Attractive tax aspects Witnessing a paradigm shift in the way certain energy transactions are structured, promoted and financed Changing participation by investment banks Disintermediation between project sponsors and investors Sutherland Asbill & Brennan LLP

4 Current and Developing Alternative Investments Alternative investments sectors in which TIAA-CREF is active Recent transactions Common issues when TIAA-CREF makes investments Trends in alternative investments Sutherland Asbill & Brennan LLP

5 Teaming with Investors Overview of Freepoint Commodities Recent transactions with institutional investors Challenges in such transactions Significant developments affecting energy deals Sutherland Asbill & Brennan LLP

6 June 2014 Confidential

7 Freepoint Commodities LLC ( Freepoint ) is a physical commodity merchant headquartered in Stamford, Connecticut. It was formed in early 2011 by the former principals of Sempra Energy Trading ( SET ). Under their leadership, SET was profitable on a net income basis for 37 consecutive quarters, with an average annualized pre-tax return on capital of approximately 30%. As of January 2014, Freepoint employs approximately 240 highly-skilled specialists worldwide. Over 60% of these employees have worked together in the past and share a common culture and entrepreneurial spirit. Freepoint continues to build on the success its founders achieved at SET, and continues to leverage the extensive experience and key relationships of David Messer and their entire management, investment, and trading teams. 6/16/2014 Confidential 7

8 Building a world-class physical commodities merchant trading and finance business across a broad range of commodity products. Merchant Trading Physical commodities merchant business unit with, at its core, a low-risk, reliable customer-driven business. Merchant Finance Provides highly customized funding solutions for natural resource producers. o o Structured Finance Portfolio of commodity-backed loans which are amortizing/selfliquidating, with a blend of diverse credits and maturities ranging from months. Principal Investing Reserve and asset-based commodity investment business that optimizes off-take and optionality while leveraging the merchant trading platform. Integration of our Merchant Finance and Merchant Trading business: o o o o o Commercially manage invested production assets Market and trade commodities globally Provide supply services to customers Develop risk management products for clients Provide commodity finance to clients 6/16/2014 Confidential 8

9 Boise Denver Los Angeles Houston Toronto Stamford Louisville London Zug Beijing Shanghai Singapore Headquarters Marketing Trading 6/16/2014 Confidential 9

10 Freepoint Commodities has partnered with Stone Point Capital to build a physical commodity merchant platform. Stone Point Capital has contributed US$315 mm while senior management and employees have contributed US$80 mm. Stone Point Capital is a private equity firm with approximately US$10 billion under management. Principals of Stone Point Capital include: Charles A. Davis, Stephen Freidman, Meryl D. Hartzband, David J. Wermuth, and Nicolas D. Zerbib. Funds managed by the firm make investments in various financial services companies. 6/16/2014 Confidential 10

11 NatGas Power Crude Products Coal Emissions Metals Shipping Ags Americas Canada US Latin America Asia Pacific China Other Asia ANZ Europe, Middle East & Africa Western Europe CEE Middle East Africa 6/16/2014 Confidential 11

12 What is Merchant Financing? Merchant Financing encompasses both principal investing and structured commodity credit transactions In its simplest form, Merchant Financing provides natural resource producers with funding in exchange for control of commodity flows or utilization of assets The Merchant Finance business draws on outside capital sources, as well as that of Freepoint and its partners Freepoint s edge is defined by o Origination capabilities (leveraging relationships from the merchant trading business) Merchant Financing Structured Finance Syndication Principal Investing o Market knowledge (trading and logistics) and o Structuring Capabilities 6/16/2014 Confidential 12

13 Brazahav: Brazilian Gold Mine, 12/28/ Structured commodity financing to fund the development and expansion of a producing gold mine in Western Brazil. Freepoint will market 100% of the mine s output for gold and silver. Arrowhead: Wyoming Gas Wells, 2/28/ Principal investments in sixty-six natural gas producing wells located in Southwest Wyoming. Covenant: Kentucky Coal Mine, 5/31/ Structured commodity financing backed by coal off-take agreement associated with mine in Kentucky Whistler: Gulf of Mexico Offshore Oil Platform, 7/11/ Principal investment in offshore oil and gas reserves and offshore platform in the Gulf of Mexico. Freepoint will market the production of crude oil from the field. Elm Ridge: San Juan Basin Gas Volumetric Production Payment, 7/17/ Structured commodity financing backed by natural gas and oil production from nearly a thousand wells located in New Mexico and Colorado. 13

14 This document does not constitute an offer to sell or solicitation to subscribe or purchase an interest in any investment or an offer to enter into any contract. The contents of this Presentation are presented for informational purposes only. While Freepoint Commodities LLC ( Freepoint ) believes the information presented in this Presentation is reasonable, this Presentation is provided AS IS and without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranty of merchantability, fitness for a particular purpose, or non-infringement. Freepoint assumes no responsibility for errors or omissions in this Presentation or other documents which may be contained in, referenced, or linked to this Presentation. Freepoint may currently have, and may in the future have, positions in the markets referenced in this Presentation. Any such positions may be consistent with, or contrary to, any information presented herein and may ultimately have some effect on the price of commodities or other assets described in this Presentation. Any recipient of this Presentation is expressly responsible to seek out its own professional advice with respect to the information contained herein. Freepoint is not acting as a fiduciary, investment or commodity trading advisor or in any other advisory context with respect to any such recipient. Suitability and eligibility criteria may apply. Some assumptions on which the Presentation is based inevitably will not materialize, and unanticipated events and circumstances will occur. Moreover, as the Presentation contains information pertaining to periods farther in the future, the assumptions become more vulnerable to change, thereby making information contained therein for such periods more speculative. Therefore, the actual events that may occur may vary from the projections contained in this Presentation, and the variations may be material. Freepoint is not obligated to notify you of any changes to the information contained herein. The information contained in this Presentation is based on estimates and assumptions about circumstances and events that have not yet taken place, may not have an empirical basis, are subject to variation and are inherently unpredictable. Accordingly, there can be no assurance that information relied upon in preparing this Presentation will prove accurate of that any of the projections will be realized. It is expected that there will be differences between actual and projected occurrences, and actual occurrences may be materially greater or less than those contained in this presentation. By accepting this Presentation, the recipient hereof agrees to keep it confidential and not to use it or the information contained herein for any purpose other than discussing its contents with Freepoint. 6/16/2014 Confidential 14

15 Bringing the Deal Together Recent transactions representing a sponsor or an institutional investor Common or significant issues in such deals Potential legal changes which might affect the market for alternative investments Sutherland Asbill & Brennan LLP

16 Questions and Answers? Sutherland Asbill & Brennan LLP

17 Panelist Information Marietta Moshiashvili Managing Director Head of Direct Equity Originations Natural Resources and Infrastructure TIAA-CREF 730 Third Avenue, 4th Floor New York, NY Tel: Frank Conley Managing Director Structured Commodity Finance Freepoint Commodities LLC 58 Commerce Road Stamford, CT Tel: Thomas Warren Partner Sutherland Asbill & Brennan LLP 999 Peachtree Street NE Atlanta, GA Tel: David T. McIndoe Partner Sutherland Asbill & Brennan LLP 700 Sixth Street, NW, Suite 700 Washington, DC Tel: Sutherland Asbill & Brennan LLP