The Hindu Business Line : Private equity players step up ‘green’ investments

IFC, the private sector lending arm of the World Bank Group, on Tuesday announced it will make its first investment in a third-party environment-focused private equity fund. Its investment of up to €15 million in a fund handled by French management company Aloe Private Equity would be targeted specifically at companies, primarily in India, besides China, which focus on clean and renewable energy, waste recycling, emissions controls, and eco-processes.

Through its involvement in this fund, IFC would provide support to smaller businesses in the clean energy and environment sectors that are unlikely to receive funding from mainstream private equity groups.

Swedfund, a risk capital company owned by the Swedish Government, and Proparco, the private sector financing arm of the French Development Agency, would invest €8 million and €5 million, respectively, in the new fund alongside IFC.

“We welcome IFC’s investment and, more importantly, its strong support of Aloe Private Equity’s business model and social and environmental focus. IFC, with its unique expertise in the clean energy and environment sectors, will be a valuable partner in pursuing our strategy to expand in Asia and will provide tremendous benefits for existing and future portfolio companies,” said Mr Vivek Tandon, General Partner at Aloe Private Equity.

In line with the growing interest in ‘green ventures’, a consortium of investors, including IDFC Private Equity, GIC Special Investments, CDC Group Plc and Infrastructure Development Finance Company, had earlier committed $100 million to a wholly owned photovoltaic subsidiary of Moser Baer.

Also, a unit of Dubai World, the Dubai-based investment group, and Sindicatum Carbon Capital Holdings, which is partly owned by Citigroup, have plans to invest $600 million for projects that produce carbon-emission credits. According to industry players, Istithmar World Ventures will invest $150 million in the Istithmar and Sindicatum Climate Change Partnership LP. The fund raising will be completed by the first quarter of 2008.

The fund is expected to help the London-based Sindicatum develop its $4 billion clean energy projects in India, besides Indonesia and China, to gain credits under the United Nations’ Kyoto Protocol. A project that eliminates greenhouse-gas emission can qualify for certificates that can be sold to polluters in emission trading systems.