Macquarie Funds Management, an arm of Australia’s largest investment bank, is aiming to raise $250 million (€207 million) for a private equity fund of funds focused on the clean energy sector.
The bank expects the Clean Technology Fund to raise a majority of its funds in Australia and to reach a first close of $150 million by the end of the year, according to Australian press reports. It will be a 12 year closed fund with the option of two two-year extensions, and a commitment threshold of $500,000. The majority of its investments will be in the North American market due to the comparatively small volume of activity in Australia.
Macquarie are defining Cleantech as products, services and processes designed to improve the efficiency, lower the cost and reduce the negative environmental impacts of energy use. The fund’s strategy will focus on proven technologies such as wind farms rather than those sectors that are still in early stages of development.
Although the fund will primarily be a fund of funds it will also have the capacity to co-invest. It is targeting returns that outperform listed equities as represented by the MSCI World Accumulation Index, which has achieved annual returns of approximately 9.1 percent over the last decade.
The alternative energy sector has attracted increasing attention from private equity firms in recent years. In January 2004, Englefield Capital and Crescent Capital joined forces to create a £400 million (€576 million; $732 million) wind farm portfolio in the UK, while London’s HgCapital has established its own renewable energy team. Analysts say interest has been driven by a combination of rising oil prices, increasing environmental awareness and government policies.