The VM [xx] could not be placed on cloud [LCloud] due to the following issues:
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The virtual machine workload xx specifies settings that are not allowed by any capability profile supported by the cloud. A list of validation errors specific to each matching capability profile can be accessed by validating the hardware profile or template before it is rated
Ensure that there are no operations occurring on virtual machine xx and attempt placement again.
The issue is that VM template had no cloud capability Hyper-V selected, so going back to VMTemplate properties - Hardware and selecting capability (on the very top of the dialog) solved the issue.
Refer to http://social.technet.microsoft.com/wiki/contents/articles/4149.capability-profiles-in-scvmm-2012.aspx