IFC proposes to invest $20 mn in Cleantech Fund

International Finance Corporation, a member of the World Bank Group, has proposed to be an investor in South Asia Clean Energy Fund (SACEF) by investing $20 million (around Rs 97.6 crore), according to a company statement. SACEF aims to raise $200 million (around Rs 976 crore).

The fund will target companies located in India and will also eye regions like Sri Lanka, Bangladesh and Nepal. The principal sponsor for SACEF is GEF Management Corporation, a US-based company dedicated to invest in the energy, environment and related sectors since 1990.

The fund is an Alberta, Canada limited partnership and will be managed by South Asia Clean Energy Management, based in Mauritius. The fund manager will be advised by a core team of investment professionals who will be based in Mumbai.

Cleantech investment had seen a hit due to the global slowdown. However, analysts are saying that the investment in cleantech segment has seen a rebound in the second quarter of 2009.

According to the preliminary second quarter results for investment in clean technology, the Cleantech Group-— that tracks clean technology investment — Indian cleantech companies raised $131 million (around Rs 640 crore) in seven investment rounds (of which one deal amount was not disclosed), an increase of 167 per cent from the previous quarter and up 161 per cent from the same period last year.

The largest deal was a $42 million round for Hyderabad-based Ramky Enviro Engineers which specialises in recycling and waste. The most active investor was IL&FS (Infrastructure Leasing and Financial Services) which invested in two deals. Other investors in the quarter included Blue Run Ventures, DFJ, Mumbai Angels, New Enterprise Associates (NEA) and Axis Private Equity.

Private equity and VC investments increased nearly 10 times from $30 million in 2006 to $300 million by 2008, says a report by Ernst and Young. It further said PE/VC players had invested $527 million in the sector — 24 per cent of the total transaction value in India for the period January 2005 and 21 July 2009.

“Growth in this segment will not just be driven by business rationale, but also be necessitated by serious environmental concerns. However, a lot depends upon the extent of government’s fiscal and policy support to this sector,” adds Kuljit Singh, partner and transactions advisory leader for infrastructure, real estate and government, Ernst & Young.