Clean tech firms new investment arena for PE funds

Tuesday, 30 March 2010, 11:23 Hrs
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Clean tech firms new investment arena for PE funds
Mumbai: Encouraged by government budgets, rising ecological awareness and entry of corporate players into the segment, private equity (PE) funds plan to invest in clean technology companies, reports Economic Times.

According to Venture Intelligence rolls, in the first three months of this year, already five private equity dealt in clean-tech sector aggregating to $150 million. "Clean technology is a very interesting space and it cuts across different sectors. Factors like declining cost curve for new technologies (within the sector), active government support and under-representation in the capital market make it a good avenue for capital investments," said Raja Parthasarathy, Managing Director, IDFC Private Equity.

Investments into clean technologies are likely to grow even further in the event of the government readying itself to implement a 20-25 percent reduction without any binding in carbon emission intensity by 2020 as part of its Copenhagen Climate Summit plan. In its budget, the Government has stressed on the need for clean technologies to replace processes in polluting businesses.

According to PE investors, gestation period, or company turning profitable, in clean-tech companies could be anything between six months to about seven years. Hydro-electricity plants take 3-7 years to yield profits, while wind energy projects could start yielding profits in about six months if implemented properly. While private equity investors expect an annualized return of 25-30 percent in general investments, it would be around 20 percent.

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