Investment managers at cleantech funds are looking at the world with totally new eyes these days – the financial crisis, which has ravaged stock prices and wiped out major financial institutions, offers buying opportunities that are unprecedented. Now’s the best time to snap up bargains, they say.
The hard numbers prove this ain’t illogical. Investment in the US clean tech sector rose 55% to more than $2.4 billion over the past twelve months. One of the main drivers of this could be the US government’s $700 billion Housing and Recovery Act stimulus package. The tax concessions boosted wind energy, geothermal and biomass projects and are expected to have a long lasting effect on the capital markets.
Clean tech investment managers responsible for huge amounts of assets, are set to go on a spending bonanza in the months ahead. Not only the US clean tech sector but also Chinese markets are set to benefit from this. For instance, Climate Change Capital, a fund in London, announced earlier this week that it will invest $732 million in Chinese environmental investment objects within the space of 12 to 18 months. The Chinese clean tech scene is unquestionably the fastest growing clean tech market in the world. The investments that Climate Change Capital will consider range from clean technology firms to industrial waste management companies.
Ka Keung Chan, managing director and head of China investments at the fund, said there are a lot of cheap assets which he is considering to purchase. “If you see the right company, this is the best time to negotiate,” he told Reuters news agency.
Some believe that the invigorated interest in all things China by clean tech professionals might just be the endorsement the Chinese clean tech sector was waiting for. Thus far, the Chinese renewable energy market, despite its size has remained a relatively obscure area for clean tech venture capitalists. BusinessGreen reports that recent venture capital statistics indicate that investments in Chinese clean tech firms totaled a meagre $111 million this year so far. This compares with $1.7 billion in US clean tech firms.
The world’s fourth-largest insurer, UK based Aviva said it is launching a E500 billion cleantech investment fund that will invest in a range of renewable energy projects including biomass, biogas, geothermal, solar and wind projects.
The fund, which will be managed by SachsenFonds Group (based in Germany) will invest amounts varying between ‚Ç¨30 to ‚Ç¨75 million in renewable energy projects. The launch had been occasioned by growing demand for green investments from customers. But Aviva’s chief executive Alain Dromer, speaking at the Triple Bottom Line Investment conference on sustainable investment in Amsterdam, called for stock market authorities to demand that listed companies provide information on their sustainability credentials. He suggested companies could provide these reports together with their quarterly financial reports.
“I would like to see all stock market listing authorities make it a listing requirement that companies must evaluate the responsibility and sustainability of their business model, and either put a forward looking sustainability strategy to the vote at their AGM or explain why they were unable to do so,” Dromer said.
This year’s stellar performance of the US clean tech sector is a continuation of a trend that set in last year. Investments by VCs in the sector totaled $2.6 billion during the first three quarters of 2007, marking a 46 percent rise compared to the full year performance of 2006, according to a report from the National Venture Capital Association (NVCA) and research firm Thomson Financial. In 2006 $1.8 billion worth of clean tech investment cash was injected in 180 ventures.
You might wonder at the end of the day what the difference is between ‘green’ pushing up the stock market and the ordinary goings on. The short answer is ‘not an awful lot’. But if you look closer there might be a tiny bit of solace in the fact that the businesses that are the objects of greed this time around are beginning to have the makings of something that might make a difference to the environment.
That’s what the head of the Intergovernmental Panel on Climate Change, Rajendra Pachuari, was talking about a few days ago. He said that by the time the financial sector will have pulled itself together it’s likely that sustainable development will be a central focus point in direct as well as stock market economic growth.
Let’s hope that cuts it.