With investor interest in alternative energy soaring, and government subsidies in the area favoring agricultural boondoggles rather than technology innovation, VCs can expect to continue dominating early-stage funding in the sector. But later-stage financing in the broader cleantech market needs a broader array of options than the public equity
market, and this will spur a new financing market made up of project finance, asset-based debt, leveraged operating debt and any number of yet-to-be-created financial vehicles unique to the sector.
In this vein, it's a good sign that Lazard, one of the most innovative and transaction-oriented banks on Wall Street, has taken a unique approach by creating a new unit aimed at driving alternative energy business.
Reuters
reports that Lazard has added personnel to its global energy M&A practice as part of a "virtual group" focused on alternative energy, drawing from bankers in its industrial, energy, utilities and agriculture areas. The firm should probably add biotech, transportation, construction, information technology and a host of other disciplines to the list, but the approach is the key point. George Bilicic, global head of power and energy at Lazard, tells Reuters the firm wants to offer a full range of expertise to old fashioned energy companies looking to branch out beyond their traditional businesses.
Bilicic says that as the market matures, traditional energy companies will be active M&A players in the alternative sector, and Lazard wants to offer them services to help them diversify and offset the fact that with soaring commodity fuel prices, oil producer stocks do not always keep pace with the value of their underlying assets. He adds that Lazard will work directly with alternative energy companies to raise capital. That could prove to be a big plus to venture capitalists hoping to leverage companies with additional financing before seeking public exits.
- Clifford Carlsen
See Jan. 8 story from Reuters
See Jan. 4 post from VC Ratings
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