Hong Kong-based Plus Renewable Technologies bridges the gap between business and renewable energy, writes John Cremer
Many executives talk of using their businesses to foster change, but Paul Cheng is actually doing that in ways that are sure to have a lasting, positive impact.
His firm helps investors, including global financial institutions and private equity funds, get involved in renewable energy projects around the world and, where necessary, also helps to manage those assets over the long term.
“We work with local developers in different countries from the planning and construction phase all the way through,” says the Hong Kong-based chief executive of Plus Renewable Technologies. “Our team, which includes former investment bankers, does an assessment of whether an opportunity is financeable and bankable. We identify the risks and understand how to mitigate them in order to satisfy any lender. We also have a team to design the projects, find local contractors, and are mindful of government policies and planning permission in specific locations.”
To date, the main focus has been on developing environmentally friendly solar PV (photovoltaic) projects to meet localised energy needs and reduce reliance on large-scale power stations and the grid system.
For instance, the firm’s first venture five years ago was in New Jersey, where they put a 2.8 MW system on the rooftop of the largest shopping mall in Newark. Everything went well, leading to at least 1.3 GW of large, utility-scale solar farms in west Texas which has an abundance of sunshine, and a tailor-made 1MW installation for a water treatment plant in Arizona.
Already, the firm is managing a total of over 5.9 GW of third-party owned solar PV and wind assets. And with mounting concerns about climate change, carbon emissions and adverse weather patterns, it is clear that demand for sustainable sources of energy can only multiply.
“People know about our domain expertise when it comes to this type of infrastructure project, so developers contact us, but we are also actively involved in sourcing projects,” Cheng says. “In Asia, we are looking at rural areas historically lacking in power. In China, we talk to provincial governments and industrial parks about putting solar PV on rooftops and supplying energy to factories. At the end of the day, we must consider what is needed to supply renewable power to each community. That is the way forward, and the key driver is what value we can bring.”
Cheng got into the sector by linking up in 2012 with a group of bankers and financiers who wanted to do more than simply making loans to projects and putting money to work. They took time to learn the business from the ground up, working with developers to understand the fundamentals of build-own-operate projects, and then bought a company which manages renewable power stations to know exactly what is expected of these assets.
“Now, we probably look at about 200 opportunities a year, with a less than 5 per cent conversion rate,” Cheng says. “We have to make sure each one is viable and bankable for investors. Some need more time to work, especially if government regulations are changing.”
That, he notes, can be a major factor, along with foreign currency risks and scalability — a very small project may not justify the effort required.
“Investors will own the asset, and they want long-term, sustainable returns if they commit funding,” Cheng says. “Our job is to make sure each project is managed and operated properly. The technology will improve, but we want the systems to last for at least 30 years.”
Before getting into this field, Cheng had a successful career in accountancy and investment banking, after initially wanting to be a physicist. His grandfather founded the Swindon Book Company in Tsim Sha Tsui, and his mother worked in the business while his father flew planes for China Airlines.
The family stressed the importance of education, and after primary school at LaSalle and a year at Diocesan Boys’ School, Cheng went to boarding school in England.
“My parents were very focused on academic achievements; after school it was straight to tutorials and then homework,” he says. “At 13, I wanted to be a little more independent and Uppingham School was a revelation. I was one of the few Hong Kong Chinese there and really enjoyed the boarding environment and all the different sports.”
Showing a talent for science and maths, he went on to take a physics degree at St Andrews University in Scotland and, before graduating in 1977, was keen to continue in academia, but opted instead to be trained as an accountant with Coopers & Lybrand in London.
“The first year was difficult as I came from a non-accounting background, but I had an innate curiosity about how businesses operate.”
In the early 1980s, he was transferred to the firm’s audit division in Hong Kong and, in due course, joined merchant bank NM Rothschild for nine years to do corporate finance deals. However, when a few friends in the banking fraternity decided to set up a venture capital fund investing in different technologies, the chance was too good to miss.
Things went well there for a couple of years, and when the fund was bought out, Cheng took an 18-month course at Insead before joining investment bank BZW as head of M&A in Asia. He focused on TMT (telecommunications, media and technology), and subsequently at Barclays Capital, oversaw lending and financing for infrastructure projects around the region.
“It was very intense, but I enjoyed the adrenalin, the human interest, and understanding how to structure a transaction.”
Later, with AIG Investment Corp, he worked for the first US$1 billion private equity fund investing in power, telecom and toll road projects across Asia. And then, seven years in Bangkok with an Asian Development Bank-linked fund led back to Hong Kong and the precursor of his present firm.
“There is still a lot of excitement in Asia, and my team is very committed,” Cheng says. “I want to be involved and able to contribute.”
