There is definite proof that sustainability-focused funds are outperforming their conventional counterparts. But some experts believe the traditional explanations for this are wrong.
An investment of $5.85 million has been made for a 12% stake in Asia Wind Group, which is in the course of acquiring minority stakes in wind farms in Asia as well as manufacturers of wind turbines and components. The majority of ChinaÆs power is currently sourced from coal. The Chinese government is trying to find other methods, and is looking into nuclear power, hydroelectric power and alternative sources such as wind and solar power.
Regarding this move towards cleaner energy in China, London AsiaÆs CEO Simon Littlewood says, ôAccording to BeijingÆs minister of health, 65% of deaths in the city are pollution-related, so there is a big push for cleaner energy. You canÆt move for potential wind farm projects that are appearing in Inner Mongolia.ö
However, he adds that even though raising cash for such projects is relatively easy at the moment, some capital raisers are not performing important preliminaries such as wind mapping, and there is a lack of actual, physical windmills rotating on the steppe and creating electricity.
LACPEF has also just invested ú1.9 million for a 10% stake in China CDM Exchange Centre. This is a Jersey-incorporated company providing brokerage, advisory and research relating to the reduction of greenhouse gases, helping Asian clients identify and sell carbon credits. It also acts as an emission broker and maintains its own carbon trading portfolio. It will operate via an alliance with Chinese emissions broker Beijing Changjiang River International Holdings.
These investments complement other recent LACPEF energy investments in China. In October, it announced plans to invest $3.9 million in China Solar Energy, a company which builds solar energy-powered buildings in the PRC. The company is finishing off a large scale sea-themed leisure complex in Beijing, which is understood to be one of the worldÆs largest solar-powered buildings.
The fund also invested ú1.9 million into China New Energy during the summer. China New EnergyÆs core business is the supply of turnkey technology solutions for the production of ethanol from corn, sugar cane and cassava. The company has a 60% market share for ethanol production equipment in China. New legislation in 11 of ChinaÆs provinces now requires that 10% of all vehicle oil consumption to be in the form of biofuel.
LACPEFÆs fees are 2%, plus 20%. The target is to double the value of the fund every three years. There is no lock-in for fund investors because as it its Aim listed, investors can sell any time.
To get the clarity they want to make informed portfolio decisions, asset owners and managers must now blend and adapt multiple sources of traditional and non-traditional data to create actionable insights, said speakers at a webinar hosted by AsianInvestor and IHS Markit.
The country's largest insurer Ping An set up a $62 billion green investment target by 2025. Several more players are also joining the hunt for sustainable assets.
The boss of Thailand’s second-largest pension fund hopes that proposed changes in the law will help her diversify more into overseas markets. She is particularly bullish on China.
Investors can still find spread premiums in niche private debt, with the asset class's prognosis looking strong, said a keynote speaker at AsianInvestor’s latest summit on Wednesday.