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Charlotte Dudley

Charlotte Dudley

Charlotte is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

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Clean-Tech Venture Capital Investment Hits Record $4bn

Global venture capital investment in clean-tech firms hit record levels in the first half of 2010, with investment totalling more than $4 billion, preliminary figures reveal.

A preliminary report from green technology research organisation Cleantech Group and consultancy Deloitte shows clean-tech venture investment in North America, Europe, China and India reaching $4.06 billion for the first half of this year, slightly more than the previous record of $4.04 billion in the first half of boom year 2008.

The latest half-year figures represent a 65% increase from the first half of 2009.

Richard Youngman, vice president of global research at Cleantech Group, said the bounce back in clean-tech venture investment was driven by the resurgence of the solar sector, a high volume of follow-on rounds and “the return of the mega-deal”. He said large venture transactions were, in part, a response to the “lacklustre and unpredictable state of the clean-tech IPO market”, noting both solar firm Solyndra and Chinese wind turbine maker Goldwind’s recent shelving of their initial public offerings.

In a media briefing accompanying the report’s release, Youngman identified the solar sector as the second quarter’s big winner, with $811 million in venture investment – or around 40% of the clean-tech total – across 26 deals involving companies such as Solyndra, BrightSource Energy and Amonix.

Biofuels was the second most active sector, with $302 million invested across 13 deals, while a $165 million “mega metering deal” involving Switzerland’s Landis+Gyr helped to push the smart grid sector to a record quarter of $256 million investment over 11 deals.

In terms of volume, energy efficiency topped the sector list with 31 transactions worth $147 million. Youngman picked out standout deals from Irish LED developer Nualight and Dutch low-power display company Liquavista.

On the IPO front, it was China’s turn to shine with 12 of the 19 clean-tech IPOs during the second quarter from Chinese firms.

“Chinese companies are responsible for raising $1.7 billion of the $2.1 billion raised in the [second] quarter,” said Youngman said, noting the rise of China’s Shenzhen Stock Exchange and the government’s broader energy security commitment.

He described the current IPO market in Europe and North America as “anaemic”.

Youngman said the global IPO market remained “tough but open”, noting Chinese clean-tech IPOs, Origin Water and Narada Power, and the enthusiasm in the US surrounding the recent Tesla Motors listing.

While companies such as Goldwind and Solyndra shelved IPO plans, the report noted the latter had raised $175 million through private funding.

The report also highlights the growing role of multi-national corporations and utilities in clean-tech investment, listing Intel Capital, GE Capital, Shell, Votorantim, Alstom and Cargill as key participants in the top ten venture capital deals for the second quarter.

Despite the sluggish economy, corporate clean-tech investment leapt 325% year on year to a record $5.1 billion.

“Major US utilities are increasing direct investments in wind and solar due to improving cost scenarios, favourable tax credits and incentives, and evolving pressure to meet Renewable Portfolio Standards,” said Scott Smith, head of Deloitte’s clean-tech division in the US.

“Meanwhile, the largest global companies are seeing the business case for operational clean-tech integration, leading to record corporate investment. This uptick was driven by companies looking to improve energy efficiency and reduce carbon emissions in order to reduce operational costs, mitigate energy price volatility risk, drive sustainable growth, and comply with existing and pending regulations around carbon and climate change risk disclosure.”

On the issue of government subsidies to clean-tech, Youngman said there was “not much more” that governments could do, warning corporations may have to prepare for reduced support.

“I think we’ve reached the stage that I don’t think the sector can rely on the government finance that they have in the last two years,” he said.

By. Charlotte Dudley

Source: Environmental Finance




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