What ever happened to the original Capital Dynamics (CapDyn) clean energy team, the team that started with nothing and built a $1 billion investment programme in four years? If you are the kind that keeps on top of people moves, you will have noticed that most of the senior members of the team decided to leave last year, with the majority resurfacing at asset manager Quinbrook Infrastructure Partners.
CapDyn's Clean Energy and Infrastructure programme was originally founded by a group of four. There was Karl Olsoni, an industry veteran who had spent the bulk of his career at US utility Southern Company and PPM Energy, now Iberdrola Renewables, before joining CapDyn in 2010. There were David Scaysbrook and Rory Quinlan, two Australian energy developers whom Olsoni met during his brief stint at Hastings Funds Management.
And there was Bob McClenachan, a longtime friend and business partner of Scaysbrook, who came on board a couple of years after that.
Fast forward to April 2016 and Scaybsrook and Quinlan have unveiled Quinbrook, born from the “fairly unimaginative combination” of their last names, as Scaysbrook explains. McClenachan is also on board as a managing director and, though Olsoni has started as a partner at an energy storage investment company, both he and Scaysbrook say his involvement with Quinbrook is likely.
The company originally started as a spin-off from CapDyn's Australia branch, with two biomass facilities acquired in a negotiated buyout, and is now expanding from its Sydney office to Houston and London. In addition, Quinbrook is currently targeting institutional capital to fund clean energy infrastructure projects on a deal-by-deal, direct investment basis – “asset matching” for now, as Scaysbrook puts it.
“I think investors are becoming more sophisticated, but they're also becoming more specific about how they're building their portfolios,” he explains. Scaysbrook wants the new company to be a “one-stop shop” that manages, develops and constructs projects, something he says his former team has decades of experience doing. “That's our mantra and that's not a new thing,” he acknowledges. “Obviously, we're now more recognised as investment managers and developers.”
Ask Scaysbrook how it feels to be working again with most of his former CapDyn colleagues and happy does not begin to describe it: “We're more than happy with where we've ended up – we're ecstatic. To be in business with people that you've worked with, whose company you enjoy, who you trust, with whom you have fun and shared the good and bad times – that is a pretty rare opportunity.”
BUILDING A $1BN PROGRAMME
One of the main reasons for that strong bond is how much Quinbrook's team achieved when they were together at CapDyn. As Scaysbrook recalls, the team hit the ground running and was “wearing out a lot of shoe leather” during his time as head of CapDyn's clean energy programme. “To put four funds together in four years, raise over $1 billion and invest it in 100 projects is a pretty exhausting ride,” he says.
Their first big move was to set up a solar fund in the US. In March 2011, they acquired a portfolio of 13 projects in Pennsylvania and established a partnership with solar developer Tangent to buy the assets it built. “That's our bread and butter,” Scaysbrook explains. “We believe that the demand for clean energy is largely a demand for new asset creation.”
The US Solar Energy Fund included 39 projects in five states generating a combined 78MW when SunEdison yieldco TerraForm Power paid $250 million for it in October 2014. Its investors included UK pensions like the Surrey County Pension Fund, which committed £15.6 million ($22.4 million; €19.7 million), and Clwyd Pension Fund, which committed £8 million, according to Infrastructure Investor Research & Analytics.
“We went through a broad process along with our bankers evaluating monetisation alternatives. We all felt very strongly selling the portfolio was the best outcome for investors based on this process,” Olsoni remembers. Scaysbrook adds: “We didn't actually have a particular plan to sell the assets at that point in time, but we received an offer from TerraForm that we couldn't ignore.”
Their next move was in January 2012 with the acquisition of a 64MW landfill gas portfolio, building the kind of asset diversity the team had in mind for the programme. John Breckenridge, the current head of CapDyn's clean energy programme, said the “fundamental legs” of its business include solar, wind and natural gas as well as what he calls “alternative renewables”, like landfill gas, biomass and hydro.
The biggest move, and what would end up being the original team's last, was the fundraise for the Clean Energy and Infrastructure fund (CEI). The latter closed in December 2014 backed by commitments from the Surrey County Pension and new partners including the Greater Manchester Pension Fund, London Borough of Waltham Forest Pension Fund and German insurance company Württembergische Verichergun, according to Infrastructure Investor Research & Analytics.
The fund, focused mainly on wind and natural gas, had a pipeline of projects waiting, like the 150MW Briscoe Wind Farm in Texas. A mere three months after closing, the team had almost fully deployed it. And then the departures began.
HOME SWEET HOME
To the outside observer, it may seem strange that, after a string of successes, the original CapDyn clean energy team all left within a year.
Australian natives Scaysbrook and Quinlan announced their departure in May 2015. According to Scaysbrook, the decision came down to the timing of the CEI fund's completion and where to live in the future. “Times come when you have to make decisions about where you want to spend the next 10 years of your life and we decided that we'd be better off doing our own thing. That's where we've ended up, so c'est la vie,” he says.
Front and centre for Scaysbrook and Quinlan was the chance to move back to Australia. CapDyn was planning to close its business there, so they negotiated a buyout of the company's two 68MW biomass facilities and launched their own company to manage the assets.
The reasons behind the departure of the US-based members of CapDyn's original clean energy team are less clear-cut, however. McClenachan announced his exit last June and in December, so did Olsoni.
So where does that leave CapDyn's clean energy programme? “Our clean energy business continues to attract new and returning investors and we've also closed on a number of projects as well. So our business is thriving right now. I would say that the market has voted and that we have a very good platform at Capital Dynamics today,” says a buoyant Breckenridge. Nor did he seem to hold a grudge against his former teammates: “I wish them all the best in what they're doing going forward.”
For all intents and purposes, an amicable divorce then.