Auto Industry and EnerDel and Renewable Energy and Energy & Environment and Environment and Manufacturing & Technology

Investors still may clean up on some clean-tech bets

March 31, 2012

Lithium-ion battery maker Ener1 is climbing out of bankruptcy, after receiving a $118 million U.S. Department of Energy grant in 2009 but waiting in vain for a $290 million federal low-interest loan.

Meanwhile, leaders of Carbon Motors in Connersville and Bright Automotive in Anderson are wringing their hands over what might have been after separately coming up empty in their quests to garner hundreds of millions of dollars in federal funds.

Bright, which planned to make plug-in hybrid electric work-trucks, ran out of cash and folded in early 2012, ending a three-year quest to secure a more than $300 million low-interest federal loan.

Carbon Motors, which planned to make high-tech, fuel-efficient police cars, is looking for alternative funding following the U.S. Department of Energy’s rejection of its $310 million loan request in March.

So what lesson should we draw from the spectacular flameouts? Here’s the take from Scott Prince, a Carmel-based adviser to Philadelphia-based EnerTech Capital, which invests in companies that improve the profitability of producing or consuming energy.

“Any business that puts its critical path of success through receiving such grants or subsidies as part of its core viability is making a massive mistake, and it’s playing out in front of our eyes,” said Prince, who also serves as chief marketing and sales officer for the Indianapolis-based energy software firm Blue Pillar Inc.

Prince has other core beliefs, including that investors should steer clear of green tech companies whose business models are built upon commodity prices being high or low, or upon the whims of consumers.

But that’s not to say Prince thinks green investing is dead. Far from it. He believes the greatest promise today lies in what he calls “cleaner tech”—technologies that don’t rely on huge market shifts but nevertheless bring meaningful increases in efficiency or environmental benefits.

A few examples: advancements that make coal-fired power plants less environmentally damaging, increase the electrical output from wind turbines, and boost efficiencies in electrical grid transmission.

His company operates in the last category. Blue Pillar Inc., which moved its headquarters from Georgia to the north side of Indianapolis last year, provides software that helps large energy users—such as hospital systems, universities and Fortune 1,000 companies—wring efficiencies and new revenue streams out of their on-site power systems.

Many companies touting hybrid and electric systems for vehicle applications have been tripped up by slower-than-hoped-for-adoption by consumers and businesses. Ener1, for instance, last year wrote off its $73 million stake in electric-car maker Think Global, which had planned to produce thousands of vehicles in Elkhart.

Analysts say larger companies with more diversified revenue streams might be in a stronger position to weather the vagaries of that challenging market.

That includes Indianapolis-based Allison Transmission Holdings Inc. and Pendleton-based Remy International Inc., which makes electrical components for vehicles.

Allison, a maker of automatic transmissions for buses and trucks, touted its foothold in the hybrid market during the runup to its March 15 initial public offering.

The company’s hybrid-propulsion systems for buses generated $134 million in North American sales last year. While that’s just 6 percent of total sales, Allison expects demand for that product line—as well as similar systems under development for medium- and heavy-duty trucks—to rise amid growing concern for fuel efficiency and emission controls.

Remy International, which is preparing for its own IPO, casts itself in Securities and Exchange Commission filings as a pioneer in the development of hybrid electric motors. The company has invested $83 million in the field since 2001, and more than 100,000 of its hybrid motors are in GM SUVs, Mercedes ML450s, BMW X6s and other vehicles, as well as in transit buses via a supplier agreement with Allison Transmission.

“Our prior experience in manufacturing process development has provided us with significant, proprietary know-how in hybrid electric motor manufacturing,” the company said in an SEC filing laying out its IPO plans.

“We are well-positioned to supply whichever customers ultimately become the global leaders in commercial vehicle hybrid electric motor applications.”

ExactTarget CEO hits jackpot

ExactTarget Inc. CEO Scott Dorsey is sitting on huge paper profits following the company’s March 22 initial public offering. And if the marketing software firm continues to do well, the numbers could get a lot bigger.

The stock debuted at $19 and zoomed as high as $29.88 before retreating to around $26. Dorsey, 44, owns 1.8 million shares outright that now are worth nearly $47 million.

SEC filings show Dorsey also holds options to acquire another 800,000 shares at exercise prices ranging from $4.61 to $7.70 apiece.

Most of those options have not yet vested. But exercising them at the current market price would yield a paper profit of $16 million.•

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