London/New York, 10 December 2021 – UBS Asset Management (UBS AM) today announces the hire of three senior industry experts to establish a new energy storage strategy, further expanding the sustainable investing solutions provided by its Real Estate & Private Markets business.
Energy storage is crucial to enable the phasing out of carbon-intensive fossil fuels. It allows renewable energies to be scaled further, by addressing both surges in demand and the fluctuating supply of solar and wind power.
Mark Saunders, George Manahilov and Ken-Ichi Hino bring a wealth of expertise in the development of, and investment in, renewable energy. They will be based in New York. Mark and George will co-head the energy storage strategy, reporting to Tommaso Albanese, Head of Infrastructure in UBS AM''s Real Estate & Private Markets business.
Joe Azelby, Head of Real Estate & Private Markets for UBS AM said: "The strategic expansion of our infrastructure business into energy storage complements our efforts to grow our ESG capabilities further to provide clients with a broad range of sustainable investing solutions."
Tommaso Albanese, Head of Infrastructure, UBS Asset Management said: "As demand for carbon-free electricity grows, energy storage can help renewable energy become a reliable source of power. We are well placed to capitalize on the growth of this sector given our experience of investing in renewables and these new hires strengthen our expertise and offering."
UBS-AM''s Real Estate & Private Markets business continues to be recognized by the industry for its leading sustainability capabilities and again achieved strong results across the board in the 2021 GRESB Real Estate and Infrastructure Assessments.
Mark Saunders, Co-Head of Energy Storage, spent three years at Goldman Sachs Renewable Power Group, led the formulation of an investment strategy for stand-alone storage assets and executed on ~255MW of energy storage deals and managed the onboarding of 2GWs of solar acquisitions. Previously, he spent three years as CEO of a solar technology start-up and 14 years at AeroVironment commercializing battery, solar and fuel cell technology.
George Manahilov, Co-Head of Energy Storage, brings 10 years of experience in renewables development and investing in the US and Europe – including solar, wind, hydro, storage, energy optimization software – and 11 years of principal investing and structured transactions experience with Barclays Capital and Goldman Sachs.
Ken-Ichi Hino spent three years as Head of Energy Storage at National Grid Renewables / Geronimo Energy. He has over 12 years'' experience in project development and management consulting, spanning energy storage, solar, wind, biomass, and combined heat and power.
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. UBS''s strategy is centered on our leading global wealth management business and our premier universal bank in Switzerland, enhanced by Asset Management and the Investment Bank. The bank focuses on businesses that have a strong competitive position in their targeted markets, are capital efficient, and have an attractive long-term structural growth or profitability outlook.
UBS is present in all major financial centers worldwide. It has offices in more than 50 regions and locations, with about 30% of its employees working in the Americas, 31% in Switzerland, 19% in the rest of Europe, the Middle East and Africa and 20% in Asia Pacific. UBS Group AG employs over 68,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
Asset Management is a large-scale asset manager with a presence in 23 markets. It offers investment capabilities and investment styles across all major traditional and alternative asset classes to institutions, wholesale intermediaries and wealth management clients around the world. It is a leading fund house in Europe, the largest mutual fund manager in Switzerland, the second largest fund of hedge funds manager and one of the largest real assets investment managers in the world.
Meet the members of the team responsible for UBS Asset Management''s strategic direction.
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Recent events have brought a repricing of risk across the global economy and to the energy sector in particular. Energy investments face new risks from both a funding–i.e. how well project revenues and earnings can support new expeditures on corporate balance sheets–as well as a financing perspective–i.e. how well debt and equity can be raised to supplement corporate and government funds.
These are most apparent from the estimated declines in revenues facing both the oil and gas and power sector in 2020, as well as equipment and goods suppliers (see Overview), exacerbated by financial market volatility and a slowdown in project finance transactions and mergers and acquisitions. The cost of money has risen for most actors save for mature market sovereigns, whose bond yields have fallen. The ability to price and structure financial deals remains challenging due to strong market volatility as well as the physical situation of industry professionals. Near-term liquidity constraints and growing risk of defaults across the economy also cast uncertainty, with many companies and investors opting for capital discipline over financing new transactions.
There are questions over how short-term market volatility will affect the industry landscape and investment decisions. Like the wider economy, the financial conditions for energy-related companies have changed in 2020, in particular with top companies experiencing falls in market capitalisation steeper than those of equity benchmarks. While falling share prices more directly impact investors, they provide a signal of expectations for profitability and increase the cost of issuing equity.
In the near-term, the challenges concern liquidity–sufficient cash flow to keep businesses operating and meeting obligations with customers and suppliers. Shifting market fundamentals and uncertainty over the timing and nature of economic recovery is also pressuring profitability, which shapes future funding capacity. Coming into 2020, indicators for energy-related industries trailed market benchmarks in these areas. Early observations suggest higher risks around certain segments.
Over the past two years, the market capitalisation of the top-listed oil and gas companies declined by nearly 50%, with most of the fall coming in the past year, as investors reassessed risks and profitability expectations in the face of lower oil prices, emerging oversupply and uncertainty over how well companies can position themselves in a changing market environment. These risks are also reflected in an increase of volatility compared with the wider market, as expressed by a higher beta, which was rising even before the recent crisis took hold.
For some segments, such as US shale producers, which rely on debt markets to finance operations, the knock-on effects from much lower oil prices have resulted in much higher borrowing costs and near-term liquidity constraints for a number of companies. For better capitalised players (e.g.the Majors) financial developments have forced companies to cut capital spending; dramatically re‑evaluate investment plans, and in some cases dividends; and look to debt markets to help fund shareholder commitments (see "Sectoral trends" section below).
The financial situation is varied for the power sector, where the top-listed companies have seen a loss in market capitalisation of only around 5%. Some buffer is provided by the more predictable revenues for utilities from regulated networks and renewables, where investments are increasingly focused, while many power producers in competitive markets have hedged some merchant exposure a year ahead (Rack, 2020). Renewable developers also came into 2020 with improving performance.
Players in the electrical equipment supply chain – which helps to provide everything from turbines to grid components to energy management systems – may face more challenging financial conditions than project developers. With economic uncertainties, some governments and utilities are delaying procurement of power projects, which means reduced order books and cash flow for suppliers, though there may be an opportunity to focus on repowering existing assets and adopting more flexible payment terms. Consolidation pressure on smaller renewables manufacturers with weaker balance sheets may accelerate, while larger players may be able to weather the storm with cost cutting.
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