Perhaps the biggest trend in private equity right now is investing in cleantech, a term that refers to products or services that improve operational performance, productivity or efficiency, while reducing energy consumption, waste and pollution. And PE managers in Asia are introducing the region's first dedicated cleantech funds, says Preqin, a London-based consultancy specialising in private equity and infrastructure.
According to Preqin, there are now four Asia-based PE funds trying to raise capital for dedicated cleantech funds (see table below). The two largest are from Hong Kong-based First Vanguard, which is raising $500 million for the China and Pacific Rim Water Infrastructure Fund; and Singapore-based Middle East & Asia Capital Partners, which is raising $400 million for its MAP Clean Energy Fund.
There are two more players raising $250 million funds: in Singapore, Ant Global Partners is financing its Ant Global Partners Cleantech Fund; and in Malaysia, Abundance Venture Capital seeks capital for its AVC Abundance Energy Fund.
The first private-equity or venture-capital fund to include a cleantech focus, within a diversified portfolio, emerged in 2005 in India, where IDFC closed a $440 million infrastructure fund. Then in 2006, China's Prax Capital closed a $153 million fund that included cleantech themes, as did China's Northern Light Venture Capital, which closed a $350 million fund.
Since then activity has picked up: in 2008, funds in India, China and Hong Kong closed over $5 billion worth of diversified funds that included cleantech plays, while earlier this year, Singapore's SEAVI Advent closed a $178 million diversified buyout fund.
Preqin says there are now at least 10 PE funds trying to raise capital towards themes that include cleantech, of which four are dedicated, as mentioned above. Together these 10 seek to raise up to $3.6 billion, with the four dedicated funds accounting for $1.4 billion of that.
Preqin has released a report on cleantech funds that shows huge interest among institutional investors and funds of funds. Despite the global financial crisis, overall cleantech fundraising remained steady in 2008, with 29 funds raising a total of $6 billion worldwide, roughly the same as was raised in 2007. The majority has gone to VC funds, with infrastructure funds also playing a big role.
In North America, funds this year seek to raise up to $9 billion, making this the biggest market, followed by European funds, which want to raise over $7 billion, Preqin says.
The consultants also find more than half of cleantech-focused VC firms prefer to take minority stakes, while buyout and infrastructure firms mostly prefer controlling stakes. For institutional investors, these funds represent the preferred means of accessing cleantech themes, as opposed to via the public markets, because the sector is too new to be well represented in the listed space.
Preqin's 10 largest funds with a cleantech focus raised by Asian fund managers
|Fund||Fund Type||Size (Mn)||Vintage||Fund Cleantech Focus||Fund Manager||Fund Manager Location|
|Baring Asia Private Equity Fund IV||Balanced||1,515.0 USD||2008||Diversified||Baring Private Equity Asia||Hong Kong|
|IDFC Private Equity Fund III||Infrastructure||700.0 USD||2008||Diversified||IDFC Private Equity||India|
|IDFC Private Equity Fund II||Infrastructure||440.0 USD||2005||Diversified||IDFC Private Equity||India|
|LC Fund IV||Venture (General)||400.0 USD||2008||Diversified||Legend Capital Management||China|
|Northern Light II||Venture (General)||350.0 USD||2007||Diversified||Northern Light Venture Capital||China|
|Qiming Venture Partners II||Venture (General)||320.0 USD||2008||Diversified||Qiming Venture Partners||China|
|Softbank China Venture Capital III||Venture (General)||2,000.0 CNY||2008||Diversified||SB China Venture Capital||China|
|Nexus India Capital II||Early Stage||220.0 USD||2008||Diversified||Nexus India Capital||India|
|SEAVI Advent Equity V||Buyout||178.0 USD||2009||Diversified||SEAVI Advent||Singapore|
|Prax Capital II||Expansion||153.0 USD||2006||Diversified||Prax Capital||China|
Preqin's 10 largest funds with a cleantech focus currently raising by Asian fund managers
|Fund||Fund Type||Target Size (Mn)||Fund Status||Vintage||Fund Cleantech Focus||Fund Manager||Fund Manager Location|
|ORYX-STIC Fund II||Buyout||500.0 USD||Raising||2009||Diversified||STIC Investments||South Korea|
|China and Pacific Rim Water Infrastructure Fund||Infrastructure||500.0 USD||Raising||2009||Pure Cleantech||First Vanguard||Hong Kong|
|Sandalwood Capital Partners II||Early Stage||350.0 EUR||Raising||2009||Diversified||Sandalwood Capital Partners||India|
|Ascent India Fund III||Expansion||450.0 USD||Raising||2009||Diversified||UTI Venture Funds||India|
|MAP Clean Energy Fund||Infrastructure||400.0 USD||Raising||2009||Pure Cleantech||Middle East & Asia Capital Partners||Singapore|
|AmKonzen Asia Water Fund||Infrastructure||320.0 USD||Raising||2009||Diversified||AmKonzen Water Investments Management||Singapore|
|Asia Strategic Capital Fund||Mezzanine||300.0 USD||First Close||2008||Diversified||Asia Mezzanine Capital Group||Hong Kong|
|Tripod Capital II||Buyout||300.0 USD||Raising||2009||Diversified||Tripod Capital||China|
|Ant Global Partners Cleantech Fund||Venture (General)||250.0 USD||Raising||2009||Pure Cleantech||Ant Global Partners||Singapore|
|AVC Abundance Energy Fund||Natural Resources||250.0 USD||Raising||2009||Pure Cleantech||Abundance Venture Capital||Malaysia|