| |||||||||||||||||||||||
| |||||||||||||||||||||||
Two years ago an obscure California startup, solar-panel maker SolFocus Inc., launched its first financing round, raising a respectable $32 million. When SolFocus, which seeks to enhance the effectiveness with which solar cells convert sunlight into electricity, came back to its investors last month, its earlier promise was confirmed. The firm pulled in a further $50 million. More than half of the total is earmarked for SolFocus' new operations in Spain. SolFocus is riding a wave of investor optimism about the European cleantech market, which targets environmental investments in energy, air, water, waste and sustainability. From financial powerhouses like Goldman, Sachs & Co. to small players like Zouk Ventures Ltd., a cadre of investors sees sunny returns amid rising oil prices and growing concerns about global warming. In Europe the market has been significantly bolstered by the 1997 Kyoto Protocol, a commitment by developed nations to reduce carbon emissions and accept environmental regulations, which President Bush has famously refused to sign. As more players crowd the field--last week, for example, HSBC plc announced that it was opening a new climate change fund--some observers see a bubble emerging. "I think it's a buoyant landscape, but more and more competition is moving into the sector," said Nigel Taunt, a director at London-based clean tech investor Impax Asset Management Ltd. From 2003 to 2006, VC investment in clean energy totaled ¤1.9 billion, and that figure is expected to surge to ¤3.5 billion from 2007 to 2010, according to Cleantech Advisers LLC. For the first nine months of this year, investments totaled about ¤325 million, down slightly from the ¤334 million invested over the same period a year ago. Many VCs have partly cashed out their stakes through IPOs or sales to strategic players. Cleantech IPO values more than doubled globally from $1.6 billion in 2005 to $4.1 billion in 2006. In the second quarter this year, 17 cleantech IPOs raised almost $1.7 billion. While the search for alternative energy traces to the first OPEC oil shock of 1973, the recent boom dates to the Kyoto Protocol of 1997. As of June, 172 countries and other governmental entities have ratified the global pact. "Kyoto is the driver for cleantech investment," said Solomon Wifa, a partner in the London office of O'Melveny & Myers LLP who advises on alternative energy fundraising. "Jurisdictions have committed to reduce their emissions, which makes it easier to invest in the sector with some certainty," he added. As a result, capital is flowing to entrepreneurs who build wind farms, develop new methods to reduce greenhouse gases, put caps on landfills and reduce nitrous oxide outputs. On the private equity front, in May HgCapital, with ¤2.5 billion under management, acquired a French wind-farm portfolio from Germany's Enertrag AG for ¤69 million as part of a plan to assemble £1 billion-plus of European renewable energy assets. Listed U.K. private equity firm 3i Group plc last year co-led a £8.1 million funding in DeepStream Technologies Ltd. with Doughty Hanson Technology Ventures. DeepStream makes digital sensors that facilitate energy conservation. In September, London-based Climate Change Capital Ltd. raised a ¤200 million clean tech fund. On a smaller scale, in August London venture investor Zouk Ventures co-led a £13.5 million August investment round in Solarcentury Holdings Ltd. with renewable energy investor Good Energies Inc. Solarcentury produces solar thermal and photovoltaic products, which convert light into electricity. Sometimes big and small investors select the same targets. In November 2006, Impax took a £1 million stake while Goldman Sachs made a £7 million investment in London-based waste management company Sterecycle Ltd. The company specializes in recycling municipal waste. VC and private equity players sometimes find strategic investors eyeing their prospective deals. For example, Volkswagen AG and Daimler AG on Oct. 11 acquired a stake in biofuel maker Choren Industries GmbH. The IPO exit should still be open, observers predict. But Lux Research Inc. president Matthew Nordan sees some signs of excess exuberance. "We foresee a bubble in solar and biofuels," he said. But he likes the prospects for companies that manage waste and water. There's an excess of one and a looming shortage of the other.  Deal Video
    Community
 Elsewhere on The Deal.comDealwatchThe Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||
| |||||||||||||||||||||||
