Green is the Colour of Money, Funds Say

Impax Asset Management launched this week a 100 million pounds (US$203.1 million) fund-raising for its listed environmental fund, while Ludgate Investments on Thursday listed a new environmental fund for pre-IPO clean tech firms.

A listed fund called the Low Carbon Accelerator expects to come back for more money by the end of 2007.

Green sector stocks have generally performed well: Britain's largest 100 environmentally-focused stocks grew 20 percent between last August and June, according to the EnviroDaq index.

Driven by policies meant to combat climate change, including favourable taxes and subsidies, investment in clean energy could reach some US$750 billion by 2016, versus US$100 billion last year, according to an Ernst & Young report published Thursday.

But is the money making any difference to climate change?

"It's tip of the iceberg stuff in terms of climate impact because renewable energy worldwide is still around 2 to 3 percent of energy production, so not making a huge difference, but that's double where it was five years ago so it's a big increase in absolute terms," said Bruce Jenkyn-Jones, director of investments at Impax.

"Relative to how far we've got to go to gain market share against fossil fuels there's still a long way," he said.

GOOD OPPORTUNITIES

"The most important thing is we and others have proved money can be made, so it's easier for firms and funds to raise more in future," said Jenkyn-Jones, whose fund floated at 100p in 2002 fell to 38p in March, 2003, and has since come back to stand at 127p on Thursday.

He expects annual earnings growth of 20 percent a year.

The Low Carbon Accelerator takes significant stakes in small, unlisted firms, raised 45 million pounds last October and now wants more to double its number of investments to around 30, its chief investment officer said.

"There are more good opportunities than we can handle... there's room for more funds in this area," said Chief Investment Officer Steve Mahon.

Britain's Carbon Trust gets around 100 million pounds a year from government to advise companies on how to cut their greenhouse gas emissions. Last year it withdrew a 75 million pounds fund raising after it failed to get enough interest.

"I don't think it is a bubble like the dot com one," said partner Adam Workman. "The appetite for investments is there but the quality threshold has gone up and investors are looking more closely than in 2004 when there was a dearth of stocks."

Other funds which have recently raised money include Jupiter Asset Management, which raised 25 million pounds for its Green Investment Trust in July, taking the total to almost 60 million pounds.

In May boutique investment firm London-based Nevastar Finance said it had raised US$100 million for a fund focused on climate change.