Cleantech Investment Bank Launches, Complete with PE Practice

In February 2008, Jeff McDermott asked his eldest son about what he might someday want to do for a career. “Wall Street, because it’s been so good for our family,” answered 14-year-old Dylan.

McDermott paused. Wall Street had indeed been good to his family. He had risen to co-head of UBS investment banking, before stepping down in March 2007 to pursue new opportunities (including a tunraround firm that never got off the ground). But he also had “gotten wet in a thunderstorm,” leaving business school during the financial industry’s Golden Era. Had he been drawn to automobile manufacturing, McDermott realized, his family would not have been so fortunate.

“I told him that I was in the right place at the right time, because Wall Street was growing and changing so fast,” McDermott says. “My son asked what that industry is now, and I said that, were I his age, I’d think about cleantech, because there is a real societal move toward sustainable living, and there are lots of new companies forming that will eventually consolidate. Plus, Dylan loves science. Then I stepped back and wondered why I wasn’t applying that same advice to myself.”

McDermott spent the next year meeting with cleantech industry executives and investors, culminating in today’s launch of Greentech Capital Advisors, a new investment bank focused on the alternative energy sector. The group is privately-financed — no word on dollars or investors, except that they aren’t private equity firms – and will provide advisory services for everything from M&A, restructurings, private placements and restructurings.

It also will have a private equity group, with plans to begin raising a “modest” growth equity/buyout fund sometime next year. The unit will be led by senior advisor Andrew de Pass, founder and former head of Citi Sustainable Development Investments. Former Citi SDI pro Olav Junttila has also joined as a principal.

Other Greentech Capital execs include: Robert Schultz, COO and former COO of Morgan Stanley Fund Services; Tim Vincent, head of project finance and former managing director with Goldman Sachs’ infrastructure group, Michael Molnar, Goldman Sachs’ former lead equity research analyst for the US alt energy and coal sectors; and Craig Wellen, former senior utility sector banker for Citi.

“One of the problems the big global banks have is that they’ve got one guy covering solar on the West Coast, power groups mostly based in New York and Houston, a guy working on storage or electric vehicles in a Midwestern industrial group, the tech team spread all over and then the private equity people in the asset management division,” McDermott explains. “We want to bring the same depth and quality of talent, but in a cohesive team.”

All Greentech pros will initially work out of a New York office, although some will later be relocated to satellite offices (and supplemented by locals).

Also worth noting that I asked both McDermott and private equity chief Andrew de Pass for their thought on the Markey-Waxman climate change bill that passed the U.S. House of Reps last week. They both said it was a welcome development, but too weak in terms of emission allowances. McDermott added that much of the opposition is “fear mongering being put forth by the harder carbon industry… This is a long-term problem, but we don’t deal with long-term issues as well as we should.”