A
LTERNATIVE
I
NVESTMENTS
:
O
PPORTUNITIES
IN
E
NERGY
I
NVESTING
Webinar - June 12, 2014
Panelists
Marietta Moshiashvili – TIAA-CREF
Frank Conley – Freepoint Commodities
Thomas Warren – Sutherland
©2014 Sutherland Asbill & Brennan LLP
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
©2014 Sutherland Asbill & Brennan LLP
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
©2014 Sutherland Asbill & Brennan LLP
Current and Developing Alternative
Investments
4
• Alternative investments sectors in which TIAA-CREF
is active
• Recent transactions
• Common issues when TIAA-CREF makes
investments
©2014 Sutherland Asbill & Brennan LLP
Teaming with Investors
5
• Overview of Freepoint Commodities
• Recent transactions with institutional investors
• Challenges in such transactions
June 2014
•
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.
Confidential
•
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
Structured Finance – Portfolio of commodity-backed loans which are
amortizing/self-liquidating, with a blend of diverse credits and maturities ranging from 1-120 months.
o
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
Commercially manage invested production assets
o
Market and trade commodities globally
o
Provide supply services to customers
o
Develop risk management products for clients
o
Provide commodity finance to clients
Confidential
London Stamford Toronto Zug Boise Louisville Houston ● ● ● Los Angeles ⌂ Headquarters Marketing Trading
⌂
Singapore Beijing Denver Shanghai ● ● ●Confidential
6/16/2014
9
•
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.
Confidential
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 √
Confidential
6/16/2014
11
•
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)
o
Market knowledge (trading and logistics) and
o
Structuring Capabilities
Merchant
Financing
Structured
Finance
Investing
Principal
Syndication
What is Merchant Financing?
Confidential
13
Brazahav: Brazilian Gold Mine,
12/28/2012
- 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,
2/28/2013
- Principal investments in sixty-six natural gas producing wells located in Southwest Wyoming.
Covenant:
Kentucky Coal Mine,
5/31/2013
- Structured commodity financing backed by coal off-take agreement associated with mine in
Kentucky
Whistler: Gulf of Mexico Offshore Oil Platform, 7/11/2013
- 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,
7/17/2013
- Structured commodity financing backed by natural gas and oil production from nearly a thousand wells
located in New Mexico and Colorado.
• 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.
Confidential
©2014 Sutherland Asbill & Brennan LLP
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
©2014 Sutherland Asbill & Brennan LLP
Questions and Answers
?
16©2014 Sutherland Asbill & Brennan LLP
