China & India To Get Three VC Funds For Clean Technology

The ADB will invest US$60 million to help set up three venture capital funds dedicated to nurturing new climate change technologies, also known as ‘climatech.’

AsianScientist (May 24, 2011) – The Asian Development Bank (ADB) is investing US$60 million to help set up three venture capital funds dedicated to nurturing new climate change technologies, also known as ‘climatech.’

The funds will primarily target the markets of China and India, and support early-stage technology companies that address climate change mitigation and adaptation, or environmental protection.

“Climate change will hit Asia hard in coming decades. Investing in these venture capital funds will help channel finance into innovative and affordable technologies that tackle the challenge of climate change in ways that are suited to developing Asia,” said Philip Erquiaga, Director General of ADB’s Private Sector Operations Department.

ADB is injecting US$20 million each into the three funds: the Aloe Environment Fund, Keytone Ventures, and VenturEast Life Fund, that should leverage an additional $600-700 million private sector investment into the funds.

Mitigation costs in developing countries are predicted to grow to over US$100 billion per year by 2030, depending on the scale of long-term greenhouse gas emission reduction targets. Adaptation cost estimates for Asia and the Pacific are in the order of US$40 billion per year between now and 2050.

The 2007 Bali Action Plan, the Copenhagen Accord, and subsequent climate change agreements have all identified technology innovation and transfer as key to tackling climate change. However, early-stage companies – which have not yet reached annual profitability – have often struggled to access sufficient private capital to get off the ground.

The Aloe Fund is targeting a total fund size of €200-300 million and will be managed by Aloe Private Equity. It will invest in Asian companies whose technologies can be used in China, India, and, potentially, countries in Southeast Asia with a particular emphasis on transferring technology and know-how. It will aim to make eight to ten investments of around €20 million each.

The Keytone Fund will be managed by Keytone Capital Partners. Its $200 million fund will be focused largely on climatech firms in sectors such as light-emitting diodes, industrial energy efficiency, electric vehicle and power batteries, and waste treatment. It will make around 15 investments of $10-15 million each.

The VenturEast Fund is expected to invest a total of US$200 million into companies in the Indian market that seek to apply proven technologies from other regions. Its climatech investments will be divided between healthcare, sustainable agriculture, and clean environment technologies. It will make minority investments of US$5-15 million in 15-18 companies. VenturEast Mauritius Investment Advisors will manage the fund.

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Source: Asian Development Bank.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.

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