First institutional cleantech fund holds close on €50m

Environmental Technologies Fund is blazing a green trail with its debut cleantech fund offering for institutional investors.

Environmental Technologies Fund has held a first closing of its debut, cleantech-focused fund on more than €50million ($70 million).

The firm said the fund has considerable additional indications of interest and anticipates a second close in the first quarter of 2007. The first-time team is targeting around €150 million in total.

Henrik Olsén, one of three founding partners, said: “We have gone through the process of raising funds from institutional investors to demonstrate this is a commercially appropriate focus. We are not green for the sake of it. We have to deliver sustainable returns.”

The two other founding partners are Patrick Sheehan and Peter Ho; the chairman is David Quysner who is also chairman of Abingworth.

Investors in this first close include Swiss Re, the European Investment Fund, and a number of leading pension funds and financial institutions.

Olsén said it was the first cleantech fund in Europe to be backed exclusively by financial institutions. Capricorn Ventures held a first close on its cleantech fund last month with a mix of institutional and corporate backing.

Environmental Technologies Fund will invest in outstanding growth companies
operating in areas in a broad definition of clean technologies and services. Olsén said: “This fund will capitalise on the enormous growth of cleantech from an industrial standpoint. Corporate and consumer demand is changing rapidly. We have an opportunity to create a market leader.”

Sectors include energy storage and conservation, emissions reduction, renewable energy, water, “smart building” technologies, applied materials and recycling. It will invest on a pan-European basis. It has discretionary power to deploy 15 percent of the fund elsewhere.

Cleantech is a rapidly growing category in the venture capital industry. In Europe, close to €1 billion annually has been invested in the sector from venture capital investors in recent years.

In the United States, Cleantech has become the third largest investment category after biotechnology and software, growing from less than 2% in 1999 to 13% in 2006.