Platts Renewable Chemicals Conference JW Marriott, Houston, Texas September 12, 2011 Pulakesh Mukherjee BASF Venture Capital
BASF The Chemical Company The world s leading chemical company Offers intelligent system solutions and high-value products for almost all industries Sales 2010: 63,873 million Income from operations (EBIT) 2010: 7,761 million Employees at year-end 2010: 109,140 2
Chemicals Plastics Performance Products Functional Solutions Agricultural Solutions Oil & Gas At at a Glance: BASF Segments Inorganics Performance Polymers Dispersions & Pigments Catalysts Crop Protection Oil & Gas Petrochemicals Polyurethanes Care Chemicals Construction Chemicals Intermediates Paper Chemicals Coatings Performance Chemicals Nutrition & Health 3
BASF Group: Research by segment in 2010 Research is key to the future. New technologies and products help us to find solutions for global challenges. Corporate Research Chemicals 2010 R&D expenditures circa 1.49 bn world leader in the chemical industry Since 2005 up to and including 2010: ca. 40% increase in R&D expenditures Annual sales from product innovations*: Plastics Performance Products Functional Solutions 19% 12% 10% 9% ca. 1.49 bn 22% 1% 1% 2010: over 6 billion 2015 (target): 6-8 billion Agricultural Solutions Oil & Gas Other 26% * new or improved products or applications, max. 5 years on market 4
Innovation in five growth clusters Energy Management Plant Biotechnology White Biotechnology Nanotechnology Raw Material Change OLED Fuel cell Organic photovoltaic Lithium-ion batteries Thermoelectrics More efficient agricultural practices Healthier food Plants as renewable raw materials Biopolymers Chemicals through biocatalysis and fermentation Performance biologicals Printed electronics Nano materials Paintings and coatings Medical technical devices Research on the safety of nanomaterials From oil to gas Coal and renewable raw materials 5
Growth Cluster Raw Material Change GOAL The goal of the raw material change growth cluster is to enable BASF to replace or supplement oil, the conventional chemical raw material, with alternatives STRATEGY To develop new technologies for entry into the existing value-adding chains Oil Natural gas Coal Biomass CO 2 6
Growth Cluster White Biotechnology White biotechnology enables the efficient and resource conserving production of (bio)chemical products and the development of completely new bio-based products. Example Fermentative production of vitamin B2 and enzymes for animal nutrition Enzymatic production of chiral intermediates for the production of medicines and crop protectants 7
Fermentation Products Succinic Acid Renewable raw materials Sucrose Glycerol CO 2 Lactate Competitive process for the production of biobased succinic acid Process developed (lab-scale): by-products reduced sugar or glycerol as raw material CO 2 fixation Bacterium Formate Status: development of industrialscale fermentation and down-stream processing Succinate Acetate Partner: Purac, Products 8
Sustainable Development is a multi-faceted concept Sustainability for long-term economic success $ Economic Responsibility Environmental Responsibility Social Responsibility 9
ISO 14040 & 14044 Sustainability Assessment Methods Life Cycle Inventory... quantification of inputs and outputs Life Cycle Assessment... evaluation of environmental impacts Eco-Efficiency Analysis... comparison of products or processes including all life cycle costs... ecological and economic aspects have equal weight in the assessment... standard tool in the BASF Group; more than 450 analyses carried out... method validated by TÜV and NSF SEEBALANCE... including social aspects Matryoshka principle: each step nests the previous one 10
Environmental Burden (norm.) Eco-Efficiency Portfolio 0,3 High Eco- Efficiency Alternative.1 3% Customer Benefit: Production, Use and Recycling of... 1,0 Alternative.2 35% Alternative.3 7% Alternative.4 55% 1,7 1,7 Low Ecoefficiency 1,0 0,3 Costs (norm.) Portfolio graph offers a quick but comprehensive overview of final results 11
Environment [normalized] Decision making process for biotechnological and chemical processes Vitamin B 2 for production of feed premixes Capsanthin as pigment in feed premixes -1,5 High eco-efficiency Chemical process Chemical process 1,0 Plant Plant extraction extraction from from Paprika Paprika Low eco-efficiency 3,5 3,5 1,0 Costs [normalized] -1,5 12
Field of Operation BASF s Innovation Matrix Technology New for BASF Exploratory Research Plant Science Future Business Venture Capital } Legal Separate Entities Established at BASF Technology Platforms Marketing New Business Development BASF active Market BASF NOT-active 13
BASF Venture Capital GmbH Two Key Objectives Window on Technology Financial Return Three Areas of Strategic Support: Identify disruptive technologies for established technology platform of BASF Group Complement projects of BASF Future Business Leverage external skills in the area of Growth Clusters Financial Performance Indicators: Assess opportunities to achieve riskadequate return on a single investment A solid financial return requires diversification on technologies and markets 14
BASF Venture Capital A brief profile Who we are & what we do 13 professionals 4 offices: GER, US, HK, JP EUR 150 m Fund EUR 1-5 m per company Stake 5-25% Syndicate with other VC funds Focus: Innovation in chemistry, material science, biotech Series A onwards Cooperation's portfolio companies Exits: IPO, trade sale What we don t do No Seed stage investments Buy secondaries Finance suppliers/customers or projects Invest in public companies Do not invest in: Pharmaceuticals Software/IT Telecommunication Services 15
Cooperation between BVC and start-ups Beneficial for Both A start-up company supported by venture capital from and cooperating with BASF can benefit from BASF s network and expertise advance its technology more rapidly to market maturity obtain better access to the market Powerful impetus for the start-up company By providing venture capital and cooperating with young companies, BASF can remain technologically up-to-date gain access to new business areas as a chemical company promote and participate in shaping innovative interdisciplinary technologies. Window on technology 16
Investment Portfolio 2011 Direct Investment Fund Investment BVC Offices 17