CleanTech Innovation Forum

CleanTech Innovation Forum
11 June 2009, Olympia Conference Centre, London

Technological innovation is essential in breaking the link between economic growth and environmental degradation. It is a key aspect in the move to a low carbon economy, reducing waste and the unsustainable use of resources, and satisfying the increasing demand for renewable energy and low carbon technologies.

The CleanTech Innovation Forum is a unique networking opportunity for all those involved in developing renewable energy and other environmental technologies to discuss innovations, fast-track technology transfer, find partners, offer capabilities and seek funding/licensing agreements.

The announcement from Government of a 15% energy target for renewables by 2020, now underlines the real urgency and the exciting opportunities that lie ahead in the UK market. Furthermore, with innovative engineering & design, expertise in research & development and the benefit from Europe’s largest wind, wave and tidal resources, the scene is now set for the UK to become a natural centre for world-class renewable energy solutions.

Yet no business, investor, entrepreneur or research institute can work alone – innovation and successful commercialisation requires collaboration and partnerships. The CleanTech Innovation Forum aims to facilitate in this partnering process and so help maximise the speed in which new and enhanced products and technologies are brought to market.

ICC and Economic Nationalism

ICC calls on G8 to avoid economic nationalism
Rome, 12 June 2009

ICC Honorary Chairman Marcus Wallenberg and Prime Minister Silvio Berlusconi (with translator)

The G8 summit should resist pressures to resort to economic nationalism and should further strengthen international cooperation to meet the challenges posed by the global recession, climate change and product counterfeiting, ICC urged Italian Prime Minister Silvio Berlusconi today.

”We stressed to the Prime Minister the importance of resisting protectionist pressures, which would only lead to a deeper and longer world recession,” ICC Honorary Chairman Marcus Wallenberg said following the private session.

“With the world as economically integrated as it has become over recent decades, any lurch into economic nationalism would dislocate commercial activity even further,” Wallenberg added.

M eetings between the host of the annual G8 summit and the ICC leadership have become traditional and allow the views of the world business community to be presented at the highest levels. The business views were also detailed in a six page statement, which was given to Mr Berlusconi at the meeting.

In addition to Mr Wallenberg, the ICC delegation included ICC Vice Chairman Rajat Gupta and Andrea Tomat, Chairman of ICC Italy and CEO of Lotto Sport Italia.

The delegation also conveyed to Mr Berlusconi, who will host the G8 summit in L’Aquila on 8-10 July, the urgent need to increase trade finance on which international trade – the lifeblood of the international economy – heavily depends.

“ICC continues to urge official development banks and export guarantee agencies to significantly expand their trade finance facilities during the global recession,” Mr Wallenberg said.

ICC leaders again called on the G8 to finally summon the political will to complete the long-stalled Doha Round of trade negotiations, saying the current global crisis made it more urgent than ever to achieve that objective. ICC praised the recent promises by G20 leaders to refrain from raising trade barriers before the end of 2010.

The ICC delegation said that, while there were some hopeful signs that the recession may be bottoming out in some major economies, the immediate priority was to increase demand and credit. It also urged the world’s most industrialized countries to find more effective ways to reduce the growing imbalances in their external current accounts and warned against a mood of regulatory enthusiasm in business sectors where self-regulation is working well.

Tackling climate change

ICC encouraged the G8 to play a leadership role in fighting climate change and expressed strong support for the United Nations Framework Convention on Climate Change that will try to reach a new global agreement in Copenhagen this December to regulate green house gas emissions.

ICC said the new agreement must include all major green house gas emitters and provide business with a clear, stable, and predictable framework to stimulate investment and deploy technology on the necessary scale.

“Climate change is perhaps the best example of a global problem requiring a global solution,” Mr Gupta said after the meeting. “We are worried, however, by proposals in some countries to enact unilateral trade measures to address concerns arising from differences in climate policy among countries.”

Stopping counterfeiting and piracy

The ICC delegation said that while it was en couraged that product counterfeiting and copyright piracy have become a regular topic on the G8 summit agenda, the problem continues to grow and presents a rapidly increasing danger to society.

“The result is unfair competition for legitimate economic activity and the unchecked growth of an underground economy that deprives governments of revenues for vital public services, dislocates hundreds of thousands of legitimate jobs, and exposes consumers to dangerous and ineffective products, including medicines,” said Mr Tomat , Chairman of ICC Italy.

ICC called for concrete action in this vital area, including the swift conclusion of an Anti-Counterfeiting Trade Agreement that will set new and higher standards for national and international governmental action to deal with counterfeiting and piracy and the creation of an IPR Customs Taskforce – charging it with the responsibility to establish better operational cooperation amongst G8 customs authorities, support customs capacity-building in developing countries, and share best practices on security controls and free trade zones.

“Strengthening the fight against counterfeiting and piracy at the borders is critical”, said Mr Tomat. “Government efforts to strengthen IP enforcement regimes are investments that pay tangible dividends to economic development and society. Now is the time to increase, not decrease, the resources committed to stopping the illegal trade in counterfeits and piracy.”

ICC has a long-standing working relationship with many intergovernmental organizations, including the World Trade Organization and United Nations agencies. The core mission of ICC is to promote trade and investment across frontiers and help businesses meet the challenges and opportunities of globalization.

With Profits Plans ???

With Profit Plans – Exiting with Profits!!!

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The with-profit market in the UK contains around £400 billion, roughly the same as the total in building societies. However there is one crucial difference: everyone understands how a building society works and what it offers. With-profits plans, on the other hand, come in all shapes and sizes and are often confusing and very difficult to understand. What you think you might have and what you actually have may be different.

I read this recently – does anyone have further information or guidance?

Morgan Stanley

June 19, 2009 — The Obama administration’s financial regulatory reform proposal might force Goldman Sachs and Morgan Stanley to exit their commodities and commercial real estate holdings, says Brad Hintz, an analyst at Sanford C. Bernstein.

Two of the grandest names on Wall Street turned themselves into bank holding companies last fall after Lehman Brother’s bankruptcy. Under a bank holding company designation, the firms cannot own commercial businesses. But they’re allowed to circumvent the rule by declaring themselves financial holding companies, which lets them maintain merchant banking investments of up to 30 percent of Tier 1 capital, using an obscure amendment to the 1999 Gramm-Leach-Bliley Act.

Now Obama’s regulatory overhaul might close that loophole. “Obtaining special exceptions from bank holding company rules may prove more difficult,” Hintz writes in a report today. “It may be difficult for the two surviving brokers to argue for approval to grandfather their commercial real estate business and the crude and refined product storage, transportation, refining and power generation assets.” Hintz bases his assessment on language in the Obama proposal that “the long-standing federal policy of separating banking from commerce … should be retained and strengthened.”

Morgan Stanley owns three power plants in the U.S., a fuel-distribution business and an oil-tanker company. Goldman Sachs owns more than 30 percent of Sugar Land, Texas-based oil refiner CVR Energy. Morgan Stanley bought real estate investment trust Crescent REIT in May 2007 for $6.5 billion.

H. Rodgin Cohen, the influential chairman of Sullivan & Cromwell, says it’s hard to imagine that firms have to divest certain businesses, however. “The proposal aims to strengthen the separation of banking activity and commerce, but merchant banking is considered financial activity, and owning commodity assets is permissible commodities businesses,” Cohen says. “It makes no sense because there’s no suggestions that (banks) being in the commodities business led to this crisis.”

Financing Your Business

Getting Financing for Your Business
“Money is always there, but the pockets change.” — Gertrude Stein
The perception that many small business owners have is that financing means taking whatever money you can get; the faster and easier you can get it, the better. Unfortunately, this approach doesn’t take into account the fact that getting money for your business involves a variety of considerations, financial and nonfinancial, good and bad.

Finding “smart” money. Small businesses usually need more than just cash: they need “smart” money. By smart money we mean financing that helps your business in the way that you want it to, where the financier provides not only capital, but support and expertise to your business. Smart money could be an SBA guaranteed loan that allows you to keep your ownership interests intact until your business reaches the stage at which you want to sell shares of the business. On the other hand, money that comes from letting your brother, Stanley, become a partner in your business because you need his $10,000 before the end of the week might be far more costly than you ever imagined.

The problem in locating “smart” money is that the capital market for small businesses is imperfect and consists of a great variety of underpublicized and poorly organized financing sources. Whether you are trying to locate a bank that is willing to lend money to your small business or whether you are looking for a business “angel” who will contribute needed equity capital, your quest for financing will require that you devote the same attention to obtaining capital as you give to decisions involving the business’s basic product or service.

The discussion in this module is designed to help you identify relevant traits about your business’s financing profile and understand the various financing sources that may be available to you, with an emphasis on practical information on selecting the most suitable sources of funding for your business.

Competitive Failure

Fund management

Illustration by Claudio MunozECONOMISTS tend to think that an industry divided between hundreds of players, each with a tiny market share, should be fiercely competitive, with prices cut to the bone. But economic theory struggles to explain the bizarre world of fund management, where the market is fragmented but fees stay stubbornly high.

The takeover of Barclays Global Investors (BGI) by BlackRock, finalised on June 16th, will create the world’s largest asset manager. More deals are likely in the coming months. In part that is because banks are keen to shed their fund-management arms, either because they need to raise capital or because they no longer see a business case for combining deposit-taking with portfolio management. In part it is because stockmarket falls in 2008 slashed fund managers’ revenues, leaving some groups with broken business models. But the industry remains massively diffuse and has defied past predictions of consolidation. Even the BGI/BlackRock deal will create a fund manager with only 3-5% of the global market. Perhaps the problem is that the industry has difficulty generating economies of scale. Might a few mergers be good news?

Bigger does not necessarily mean better when it comes to running other people’s money. True, a bigger group has more money to spend on marketing and can achieve economies of scale in areas such as back-office technology and administration. But there are also disadvantages of scale. Large funds are less flexible and tend to move prices against them when they trade; they also tend to be more bureaucratic and end up alienating talented managers, the ones clients want to look after their money. Luck also plays its part. Fund managers may grow for a while because of superior investment performance. But sooner or later they will be undone by a change in market fashion; their performance will deteriorate and hot money will move elsewhere.

The BGI/BlackRock deal may avoid some of these problems. BGI is one of the two biggest fund managers in the field of index-tracking, one area where having more funds under management does lead to lower costs, which in turn makes it easier for the manager to match a chosen benchmark. But that is something of a special case. The general rule of fund-management consolidations is that they may be a good deal for the companies, but they rarely bring much benefit to investors, for two reasons. First, retail fund managers compete on past performance rather than price. Alas, a good performance one year tends not to be repeated the next; but the fees carry on. Second, because of their inertia, retail investors tend not to buy funds; funds are sold to them. Fund managers must pay banks and brokers to distribute their products, and they claim back that money from investors. As a result the bestselling funds often have the highest charges; other things being equal, they represent the worst deal for investors.

The price is wrong
That second factor helps explain why there is a stark difference between America and Europe. In America, where retail investors are more willing to buy funds directly, the expense ratios of mutual funds have declined for four successive years, according to Lipper, a provider of financial information. But in Europe, where funds are largely sold through banks, annual management fees have steadily risen, from 1.3% in 1994 to 1.6% last year. Retail fund-managers have fed themselves well, but their investors have been left with the scraps.

Even institutional investors such as pension funds and insurance companies, which ought to have the clout to force down fees, are paying more. A survey by Watson Wyatt, a consulting firm, found that the cost of running a pension scheme increased by around half between 2003 and 2008. That was because schemes allocated more of their portfolios to hedge funds and private-equity managers, which charge much higher fees. Chasing performance by paying higher fees might work for individual investors, but in aggregate it is doomed to fail. The return to the average investor is the market return minus costs; if costs rise, returns must fall.

Retail investors, in particular, would do well to learn that lesson, and take responsibility for their own finances. Just as they shop around to find the best estate agent, they can seek out low-charging vehicles such as exchange-traded funds. If enough investors focus on cost, not performance, the fund-management industry will have to give them a better deal.