UBS creates renewables group

The Swiss investment bank now has 25 professionals across New York, San Francisco, London and Hong Kong dedicated to the renewables and clean technology sectors. The new group will be led by New York-based Jim Shaefer.

Swiss financial services giant UBS has carved out a dedicated group for renewable energy and clean technology within its investment banking arm.

The Renewable Energy and Cleantech Group, officially formed on 28 September, will provide capital raising and financial advisory to firms in the green infrastructure, renewable energy and cleantech sectors, UBS said in a note to its clients.

New York-based Jim Schaefer will serve as the group’s global head. In the Americas, the group will be headed by David Dolezal.

“As the sector matures, it requires a broader coverage footprint,” Shaefer said in an interview. UBS had already been active in working with clients in the renewable energy sector, but they had been spread across UBS’ utilities, technology, industrials and healthcare groups.

By “formalising” his bankers’ efforts a dedicated group, Schaefer believes UBS will be better placed to capitalise on some of the upcoming opportunities in the sector. For example, with the expiration of production tax credits extended to clean energy providers in the 2009 stimulus bill, he expects more companies to reach for a common pre-crisis financing arrangement known as tax equity.

In these types of deals, banks or insurance companies will typically buy the equity in wind projects as way to shield their earnings from tax liabilities, since the projects’ equity ownership comes with tax credits that can be used to offset taxable income. Developers typically didn’t have large enough incomes to take full advantage of the tax credits, while banks do, so the deal made sense to both parties.

“As tax grants expire,” Schaefer said, “[tax equity] could before more important.”

He also sees more opportunity in traditional mergers and acquisitions, as well as initial public offerings.

“With a potential rebound in the equity markets, we would expect some of the more mature businesses to end up in the public arena,” Shaefer said.

In recent years, UBS has participated in New Hampshire-based photovoltaic manufacturing equipment provider GT Solar’s $500 million initial public offering, Oregon-based wind producer Iberdola Renewables’ €4.1 billion initial public offering and Chinese solar energy equipment manufacturer Yingli’s $325 million initial public offering.

Overall, Scheffer said UBS has participated in 60 renewables financings over the last 5 years.

Aside from heading the group, Schaefer will continue his role as co-head of UBS’ power and utilities group in the Americas alongside New York-based Jim Metcalfe. However, he said UBS will draw a “bright line” between its traditional utility investment banking and the Renewable Energy and Cleantech Group.

The Renewable Energy and Cleantech Group has 25 professionals across New York, Hong Kong, San Francisco and London.