René Pernull

DWH Managing Board Member

Renewable Energy: Interview with DWH Managing Board Member René Pernull

With climate change and sustainability fast becoming one of the most important electoral issue in a generation, private companies such as Deutsche Werte Holding are heeding the call. We interviewed René Pernull, company chairman, to find out about their recent acquisition of Greek renewable energy supplier MAXIMUS TERRA. With DWH principally looking to invest in future-oriented businesses, and MAXIMUS TERRA exemplifying a modern approach to clean energy, the decision to invest came naturally. DWH supports the Greek energy suppliers in planning, monitoring and execution of all upcoming projects to do with clean energy production.

Mr. Pernull, why did Deutsche Werte Holding move into the renewables sector?

Well this venture into renewable energy represents exactly what Deutsche Werte Holding has always stood for: real, concrete value. I myself define assets as the ones that have substance: properties and resources for example, but also holdings in companies that produce substantive products. Value appraisals in these fields are based on physical, real-world assets, not business plans with vague five-year projections.

The energy sector produces a substantial good, is resilient to crises and works on the basis of long-term contracts. That’s why our investment in MAXIMUS TERRA is a stellar addition to our asset portfolio.

What would you say is the most fascinating thing for you about this sector, and what are DWH’s main reasons for entering this market?

Renewable energy is intrinsic to the question of climate change, and so it’s rightly been a major topic of debate for society in the last years. The clean production of energy is and will continue to be a crucial factor moving forward. As an investment move, I understand it from two different angles:

First, I consider the topic and our MAXIMUS TERRA investment in an idealistic way. If we, as a society, want to slow down climate change and protect the environment, then companies need to make drastic changes to their business models. Businesses in industrialized nations must set an example and show that every single member of society has a contribution to make here. I consider a company engaged in that process to be a substantive asset too, and that’s before mentioning the negative financial impacts that ecological developments arising from carelessness are already causing today.

The second perspective I take is that this investment has a solid ROI. When we think about how the public perceives climate change and the current political outlook, it’s hard to deny the significance of the role that renewable energies are going to play in the development of modern societies. By acquiring MAXIMUS TERRA, we gain valuable expertise that will be a deciding factor in realizing future energy sector-related projects. Thanks to long-term contracts and a plannable ROI, this equity acquisition is also quite lucrative from our perspective.

How did DWH identify MAXIMUS TERRA as a suitable candidate for acquisition?

Projects and equity participation on this scale take a long time to come to fruition and are the result of a network we’ve built over years.

A synergy-heavy network such as ours comes up with new investment opportunities on a weekly basis, and the tricky part is identifying and evaluating those options in a time-efficient and expert manner.

DWH is always in search of new investment opportunities and to this end we are tracking all EU countries to identify one. Currently and given that Greece has recovered from the financial crisis becoming an emerging market, it certainly provides plenty of investment opportunities, RES projects being one of them.

MAXIMUS TERRA being situated in Greece and having an excellent 25-year track record in renewable energy market, immediately caught our attention. Their project volume of 1.36 Gigawatts in wind, photovoltaic, biomass and biogas speaks for itself.

That’s why it only took us a short time to start weighing up the potential for cooperation between us.

How much lead time needs to be considered for an acquisition of this scale?

Lead times of course vary greatly between different projects. It generally takes a lot of time to nail down the details of any given cooperation or equity participation. However, once all parties have agreed on the conditions of the deal, signing a contract can happen quite quickly. Our previous deals have taken up several months of lead time, sometimes a year, to negotiate.

What challenges come with a diversification of DWH’s asset portfolio?

We have to be well versed in every field in order to be able to reliably assess which assets have potential and on which grounds. We study the information we’re presented alongside any investment proposal as well as thoroughly investigate the background reports and KPIs available so as to be able to calculate the deal’s overall financial potential. When it seems that a project could be profitable, we consult experts from every branch of the field in question, who clarify the risks, peculiarities and specific legalities that need to be considered.

Every specialty brings such specific knowledge. Our investments quickly turn into exhaustive and extremely interesting undertakings that absolutely depend on external expertise.

What can you tell us about the current state of the photovoltaic project DWH and MAXIMUS TERRA are involved in?

We’re in constant contact with MAXIMUS TERRA and thanks to our reporting and controlling processes we can say that we’re completely on schedule, with some milestones having being hit early. The majority of lease agreements for land areas have been signed and all environmental regulations have been considered.

MAXIMUS TERRA is involved in the fields of wind energy, photovoltaics, biomass and biogas. Which parts of the business are the ones that allow for synergies, and where is DWH looking to bring in its own expertise?

MAXIMUS TERRA is one of the biggest players in the Greek energy market, and over the last 25 years they have proven themselves the experts as far as renewable energy is concerned. So the majority of expertise on that front comes from their side. Since the field MAXIMUS TERRA is involved in is Renewable Energy Sources, and DWH is oriented in reducing climate change and protect the environment, we could potentially develop a synergy in other RES technologies, other than photovoltaic units, as well.

They, however, benefit from our initial funding and the experience we have in implementing corporate processes. Every single one of our investments extends our network, which leads to more investor visibility and reach for the businesses we work with.

The amount of prestige that comes with a deal of this kind shouldn’t be underestimated either. Building a facility of this scale will draw a lot of attention from press, investors and public eyes - not only towards MAXIMUS TERRA, but also to Deutsche Werte Holding. Investors are looking at a solution for modern, clean energy production, and as partners we are looking to position ourselves together for future investors.

But as I said, this project is also an opportunity to highlight the importance of renewable energy for society, and to raise awareness within economic and political circles.

Where do you see chances and risks when looking at this most recent investment?

Every investment comes a certain amount of risk. In the case of MAXIMUS TERRA, however, we consider this risk very low.

The main hurdles are in the project planning stage, as a lot of licenses and approvals need to be greenlit under stringent ecological and political conditions. This can’t be overcome just with money and manpower; time and experience are needed too, which is why local experts such as MAXIMUS TERRA are crucial for the successful execution of projects like these.

Once we reach ready-to-build status, only financing is needed for the construction of the photovoltaic power plants. Since most of the critical factors have been dealt with in the project planning stage, risks are comparatively low at this point. Maintenance costs are easily compensated by the long-term ROI and the cash flow we can calculate with.

Can this new partnership be viewed as a long-term step away from the traditional real estate market? Or will DWH maintain their primary focus of operations?

Our fundamental approach has always been to cultivate a diverse asset portfolio, and that hasn’t changed. Of course, we’re still interested in investing in other industries, and real estate is a part of that. But due to the high frequency of investment opportunities, we have to gauge our financial and temporal resources carefully before committing to new projects – in the end it comes down to finding the ideal combination of ROI, development potential, risk assessment and the socio-ecological benefit it provides.

Thank you for your time and insight Mr. Pernull and Deutsche Werte Holding.

Als Deutsche Werte Holding analysieren wir kontinuierlich den europäischen Markt und beobachten dabei jedes einzelne Land, um lohnende Investments frühzeitig zu identifizieren. Griechenland hat sich von der Finanzkrise weitestgehend erholt und bietet aktuell eine Vielzahl lohnender Möglichkeiten.