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Hawaii prime target for N.Y. investment bank being run by former head of Geneva Capital

Pacific Business News by Duane Shimogawa, Pacific Business News

Date: Friday, August 12, 2011, 12:00 am HST

A New York investment banking firm wants to put as much as $500 million in one or more renewable energy projects in Hawaii.

If Endeavor Advisory Group follows through on its ambitious plan, its investments would help overcome a major hurdle for local renewable-energy companies, many of which lack the necessary funding to get their projects going.

Endeavor says it is ready to pursue Hawaii green-energy projects now that Hawaiian Electric Co. has a rate structure in place that allows it to start locking local green-energy companies into long-term production contracts.

“The last few years have been spent laying a lot of groundwork, making sure we have proper regulatory models in place, and we’re now in a phase of actual project development,” HECO spokesman Darren Pai told PBN. “So a lot of hard work has gone in through a lot of different parties to bring us where we are now. We are starting to see the fruits of that with more to come.”

HECO expects to sign four more renewable-energy contracts by the end of this year, but funding for many of these potential partners remains a challenge. And that’s where Endeavor may be able to help.

David Khalilzad, former chairman and CEO of Geneva Capital, started Endeavor Advisory Group earlier this year. He’s currently in Hawaii on vacation, but he said he’ll be back to do business very soon. And when he returns, he’ll be looking for large-scale projects.

“A project of renewable energy has to have some pedigree in place for us to consider talking to our clients,” he said.

Endeavor won’t be funding startups, for instance. It is looking for opportunities in wind, wave, solar, hydroelectric, ocean thermal energy conversion, geothermal or any other renewable energies.

An ideal company for Endeavor would be one needing expansion capital, said Khalilzad, adding: “It could be acquisition funding where a company is looking to buy another plant.”

Endeavor also doesn’t want to consider projects that need less than $50 million in funding.

Michael Pfeffer, co-founder of the Honolulu-based venture capital firm Kolohala Ventures, said he’s not familiar with Endeavor Advisory Group, but he said the market is more than big enough for other players.

He said Hawaii needs as much as $30 billion to help it fund the projects necessary to meet its renewable-energy goals, “and we just don’t have that type of money here in Hawaii. So we have to look elsewhere.”

Pfeffer said his company, which is committed to investing in Hawaii companies that have a global reach, doesn’t consider Endeavor Advisory Group a threat.

“We generally try to welcome these types of companies with open arms,” he said. “We actually work with Mainland global firms to make them more comfortable with doing business here. There’s easily tens of millions to a few hundreds of millions of dollars that could be funded here across the board.”

And that’s where companies such as Endeavor Advisory Group step in.

Its financial backing comes from what Khalilzad said are long-standing relationships with private equity funds, trusts for wealthy families, public-sector pension funds, university endowments and leading hedge funds.

Endeavor’s primary areas of emphasis are energy and infrastructure, real estate, asset-based transactions, media and communications and sports finance. Besides its headquarters in New York, it has opened three offices in the past few months one each in Colorado, California and Sweden. And its management team has some high-powered names behind it, including a former executive director of energy and infrastructure at UBS, a former managing director at Morgan Stanley and a former division president at Standard Pacific Homes, one of the nation’s largest home builders.

In the next 60 days or so, Endeavor plans to announce transactions that will be valued at hundreds of millions of dollars, Khalilzad said.

Those announcements aren’t likely to include any Hawaii companies, but it’s looking to move pretty fast with renewable-energy projects in this state.

One of Endeavor’s first investments could be in the cash-strapped Swedish auto maker Saab, though Khalilzad wouldn’t identify the company beyond saying it’s a Swedish auto maker. It is also working with companies in Germany and Arizona on renewable-energy projects.

Puna Geothermal Venture near Hilo is one of the local companies on Endeavor’s radar, said Puna Geothermal Plant Manager Mike Kaleikini. He said its investor relations department is in contact with Endeavor. And that’s not the only potential funding source.

“People have inquired about investing,” Kaleikini said. “There have been others who contact us through our website, some international guys, too.”

Makai Ocean Engineering, which is involved in projects such as OTEC, is not familiar with Endeavor, but Vice President Reb Bellinger said his company has had investment inquiries from at least three other groups based on the Mainland and abroad.

“We know there’s interest building, but we’re not sure how serious they are,” he said. “There’s a lot of generated interest in OTEC, especially since our test facility went up on the Big Island.”

Bellinger said funding is key to making it a commercial-sized operation.

And that’s why he’s excited that companies like Endeavor from some 5,000 miles away are taking a hard look at investing in renewable-energy companies in Hawaii.

With the state’s ambitious renewable-energy goals now translating to actual projects that are taking shape, “it’s encouraging that more people recognize the need to invest in our energy future,” Pai said.

He said there is a lot of room to grow when it comes to adding more forms of renewable energy.

“We are not looking at any types of limits at this point,” he said.