Manila-based Asian Development Bank (ADB) is stepping up its investment in the clean energy space by putting $40 million in two India-focused private equity funds investing in this sector. The bank is putting $20 million each in Clean Resources Asia Growth Fund (managed by CLSA Capital Partners) and the Renewable Energy Asia Fund (managed by Berkeley Energy), both of which have India as one of their primary target markets.
CLSA's Clean Resources Asia Growth Fund will target private equity investments in clean energy technology companies focused on Asia, mainly in China and India. Renewable Energy Asia Fund plans to back renewable energy projects in India, the Philippines and other Southeast Asian countries.
Private equity funds across the board have been investing in India's clean tech sector, though a bulk of investments are in renewable energy projects. PE firms have also been investing in energy efficiency and carbon consultancy firms. Clean energy focused funds active in India include Global Environment Fund, BTS Advisors' clean energy fund, Olympus Capital's Asia Environment Partners, FE Clean Energy, among others. Earlier this year Orient Green Power Ltd became the first renewable ernergy firm to list in India.
"The ultimate impact of these funds will be increased contributions from investee companies to sustainable economic growth and greenhouse gas emission reductions in ADB's developing member countries," said Robert van Zwieten, Director in ADB's Private Sector Operations Department (PSOD).
Asia's booming economies and surging demand for clean power to strengthen energy security and reduce pollution, as well as ongoing sector reforms in many countries, are making the region one of the most attractive destinations in the world for environmentally-friendly investments, said an ADB statement. ADB has also earlier backed clean energy funds like FE Global Asia Clean Energy Services Fund, where it invested in 2003.
Last week ADB also took a 25% stake in three way JV with power generation firm NTPC and Japan's Kyuden International to develop a 500MW renewable power generation portfolio.
"ADB's participation in these funds will help them achieve their target fund size, and provide confidence to private investors to come on board. It will also aid capital markets development by filling a financing gap, and encourage support for other private equity funds interested in the sector," said M. Shin Kim, Head of Private Equity in PSOD.
Berkeley Energy-managed Renewable Energy Asia Fund aims to take controlling stakes in projects and project developers with investments ranging from €5-25 million ($6.6-33 million). The fund is targeting €150 million or $200 million and reportedly made a first close $67.2 million late last year. Other investors in the fund include Global Energy Efficiency and Renewable Energy Fund, BIO, CDC, Calvert, DEG,and FMO. It has an office in Delhi besides London and Manila.
CLSA sponsored Clean Resources Asia Growth Fund will target businesses engaged in clean energy-related operations taking significant minority positions. The target fund size is $200 million. CLSA Capital has been active in India, investing from Aria Investment in companies like Equitas Microfinance, VLCC, Apar Industries, among others.