South Asia Clean Energy Fund, floated by GEF in partnership with Yes Bank, has raised $2 million from Sarona Asset Management which targets financial returns in frontier markets with a mandate to support communities and environment.
South Asia Clean Energy Fund is targeting a total corpus of $300 million. It will primarily invest in Indian companies, but up to a quarter may be invested in Sri Lanka, Bangladesh and Nepal. The fund will make growth capital investments in companies which promote the use of efficient, reliable and cleaner forms of energy across three sectors – energy efficiency products and services, renewable energy generation and environmental products and services.
In addition to South Asia Clean Energy Fund, Sarona Asset Management had also put $1.5 million in the Fanisi Venture Capital Fund, the organisation said today.
With these latest commitments, Sarona is strengthening its support of frontier market small and medium enterprises (SMEs) through its fund managers, in particular within India and East Africa, it said.
“Investments in frontier market SMEs that serve the needs of increasing domestic and regional consumer demand will allow for the growing prosperity, health and wellness of millions within the middle and lower middle classes,” said Gerhard Pries, president of Sarona.
“Companies that serve their communities and protect the environment are able to financially outperform their peers. We are encouraged by the positive impact of such companies around the world, and are excited to be a part of a society’s economic development.”
Sarona Asset Management is based in Waterloo, Ontario, and is a co-founder and/or manager of a number of impact investment funds, including the Sarona and MicroVest groups of funds. Together, these funds have over $180 million in assets under management in emerging and developing country markets around the world.
GEF, which has been investing in clean energy assets since 1990, has over $1 billion in aggregate capital under management. It is also setting up a South Asia Clean Energy Fund I, which is aiming to raise around $200-$300 million.
In 2009, GEF has also invested $46.3 million in Greenko Plc, an Alternative Investment Market (AIM) listed clean energy firm. Greenko is an independent power producer, focusing on renewable energy generation in hydro, wind energy and biomass-fired plants. GEF was also an investor in electric car maker Reva, where automobile major Mahindra and Mahindra (M&M) acquired a 55.2 per cent stake last year.
There are several clean energy funds which are presently active, as countries like India face greater environmental challenge and also offer attractive investment opportunities in waste management, water treatment, energy efficiency, industrial equipment and renewable energy (such as wind, solar, biomass and hydel power).
Olympus Capital Asia Holdings, a mid-market private equity firm with a $250 million regional environmental fund that recently set up its shop, has been very active as well. Also, a host of other specialist or pure-play cleantech funds are targeting the huge opportunity in the Indian alternative energy space, beset with power supply deficit, an increasing need for energy security and rising environmental concerns.
Climate Change Capital Ltd, a UK-based investment banking group which raised a fund worth $830 million in one of the world’s largest private sector carbon fund to invest into developing economies of India, China and South East Asia, is looking to invest in carbon-embedded assets and buy carbon credits in projects. Also, BTS Investment Advisors, focused on small and medium enterprises, is planning to raise a new fund focused on clean energy.