EUROPE - European private equity leaps on cleantech

The concern with environmental issues and the consequent demand for solutions related to the generation of renewable energy and waste management has made cleantech a sought-after sector for European GPs. Dealflow in the sector has seen a noteworthy increase - 102 deals were completed in 2006, resulting in over £270m of investment across Europe, with 40% of all European venture-backed cleantech companies located in the UK, according to research carried out by the Library House. In the UK, public sector-backed investment bodies, such as The Carbon Trust, coupled with a number of local DTI R&D grants, has meant early-stage cleantech companies have received the funding they require to get to the next stage. Elsewhere, the Swedish Venture Capital Association (SVCA) revealed in a recent study that 7 out of 10 local VCs are actively seeking to back businesses developing products or services related to clean technology. In that country, investments in the sector represent 6% of the total dealflow in the first quarter of 2007, totaling SEK 25.7m (approximately £ 1.7m). In Italy, the long hours of sunshine present good prospects for solar energy players. Initiatives from private equity investors have begun to flow in this segment. Pirelli Ambiente , the renewable energy arm of the Pirelli Group , and private equity firm Global Cleantech Capital recently set up Solar Utility SpA, a joint venture to invest EUR 24m in photovoltaic energy projects. In a Europe-wide context, the prospects for cleantech investment are positive and that trend is set to continue. Data gathered by Thomson Financial and PricewaterhouseCoopers, presented at the EVCA symposium in June, shows that EUR 17bn was allocated to venture capital funds in 2006, an increase of 60% on the EUR 11bn raised in 2005. At the event, EVCA’s management described cleantech as the hot sector, but this euphoria came with a word of caution: GPs backing cleantech businesses should be aware of the need for constant development of business models to take advantage of any lucrative prospects offered by the portfolio companies. By Angelica Mari, Southern Europe unquote" Editor