HSBC Invests $350M in Better Place

Firm conducts year-long due diligence study and is convinced the model is viable and scalable.

Published: 25-Jan-2010

LONDON – Almost two years to the day after announcing its first car partnership and its first country deployment in Israel, Better Place today announced that it has signed an agreement with an HSBC led investor consortium for new equity financing of $350 million. The deal marks one of the largest clean tech investments in history and values Better Place at $1.25 billion.

This Series B equity financing round features participation from new investors including HSBC, Morgan Stanley Investment Management, and Lazard Asset Management. These investors will join existing Series A investors including Israel Corp., VantagePoint Venture Partners, Ofer Hi-Tech Holdings, Morgan Stanley Principal Investments, and Maniv Energy Capital, among others, as shareholders of Better Place. For HSBC, which led the round with an investment of $125 million, the deal represents one of the largest financial investments of its kind by HSBC.

As part of the deal, Kevin Adeson, HSBC Head of Global Capital Financing, will join the Better Place Board of Directors, and HSBC will own approximately 10% of the company’s shares.

“Today marks the end of an extensive process with the outcome being a decision by one of the world’s largest, most conservative banks, HSBC, to take the validating step of investing in a private company intent on bringing innovation to the trillion-dollar automotive and energy industries,” said Shai Agassi, Better Place Founder and Chief Executive Officer. “The strong investment commitment and global relationships that HSBC, Morgan Stanley Investment Management and Lazard Asset Management bring to the table combined with the continuing confidence from our original investors enables us to scale up globally and execute against our plan.”

In welcoming Adeson to the Board, Idan Ofer, Chairman of Better Place and Israel Corp., remarked, “Kevin and the entire HSBC team will bring more than just capital to the table. We expect that HSBC will help us to scale in Europe, China and beyond, and we’re already seeing the value that they are bringing to the company and the Board.”

Stuart Gulliver, Executive Director, HSBC Holdings and Chief Executive of Global Banking and Markets, said, “We believe the switch from internal combustion engine vehicles to electric vehicles will create future growth opportunities in the auto and utility industries, and we are delighted to take the opportunity of investing in Better Place to put HSBC at the heart of these developments. Better Place is a private-sector solution to the issue of infrastructure provision for electric cars and can succeed without government subsidy and without sacrificing consumer expectations for personal mobility.”

Better Place’s new board member, Kevin Adeson of HSBC, commented: “We are confident that Better Place has the technical and commercial solutions to allow for the mass adoption of electric cars in the near term. The Better Place switchable battery solution, which addresses the range limitation of fixed battery electric cars, will offer the consumer an affordable and attractive alternative to current combustion engine and hybrid vehicles. We expect the Better Place model to be widely adopted across many countries and cities, particularly in those markets with policies strongly favoring electric vehicle adoption.”

The financing allows Better Place to expand its geographic footprint while continuing to execute against its committed R&D and deployment milestones. The company intends to expand into markets where the business model economics and investor returns are optimized, notably in Europe and Asia.

Better Place continues to meet its timetable for Israel and Denmark launch plans for the end of 2011 when the first Renault switchable battery electric cars hit the road. Better Place also will continue to execute against its strategy of early deployment projects in Australia and select North American markets a few months after the Israel and Denmark launches as planned.
Additionally, the company’s R&D team is currently testing each element of the Better Place solution in real-life scenarios around the world in a multi-phase cycle, beginning with the company’s managed EV network in Denmark, which began last December, and a Tokyo electric taxi project with battery switch station, which kicks off in April this year. These and other development milestones lead up to full-scale trials in the second half of 2010 and commercial launch in 2011.

Agassi added: “Our technology and solutions, together with our strong partnership with Renault, provide us at least a two-year time advantage over all other alternative energy vehicle approaches. Our solution is the only one that can scale to decrease countries’ oil consumption and significantly reduce emissions, while providing consumers with electric cars that are more convenient and affordable than internal combustion engine cars.”

The transaction is subject to approval by antitrust regulators and other customary closing conditions and is expected to close in the first quarter of 2010.

Better Place will host a conference call for media and analysts and video webcast on Monday, January 25, beginning at 13:00 GMT.

There will be two ways to access the webcast conference. The first is through an audio conference call, which is for media and analysts who wish to ask questions of the speakers during the Q&A period, and the second is through a video webcast. Only media and analysts will be allowed to ask a question of the speakers.

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