UPDATE 1-Olympus Capital raising $250 mln Asia fund, IFC helps

* First environment fund to be run by Olympus Capital

* Focus on China and India deals

* International Finance Corp to invest $25 mln

(Adds investors, quotes and background)

By George Chen

HONG KONG, April 28 (Reuters) - Olympus Capital Holdings Asia is close to raising a $250 million investment fund to focus on environment-related sectors in China and India, two sources with direct knowledge of the plan said.

Hong Kong-based Olympus Capital, which has about $1 billion under management, expects to officially launch the fund in the next few months, the sources said.

The fund, which will be named Asia Environmental Partners LP, will be the first fund managed by the firm to specialise in environmental sectors, such as renewable energy and environment protection, the sources told Reuters on Tuesday.

“The ideas about environmental protection and energy saving are still pretty new in emerging markets like China and India so these sectors should have big potential to develop,” one of the sources said.

The sources declined to be identified as they were not authorised to speak to the media. Officials at Olympus Capital declined to comment.

The Private Equity and Investment Funds Department of International Finance Corp [IFC.UL], an investment arm of the World Bank, has agreed to commit $25 million, or one tenth of the total capital of the fund, one of the sources said.

A representative for IFC, which is headquartered in Washington D.C., could not be immediately reached for comment.

Institutional investors, or ‘limited partners’ in a private equity fund, who have agreed to invest in the new fund, are mostly from the United States and Europe, the source said.

Capital-raising activities for private equity funds remain active in Asia as Western investors now prefer investing in Asia-focused funds to diversify their investment channels.

The market environment in Asia has been less affected by the global financial crisis than that in the west.

Olympus Capital, which has offices in Hong Kong, Shanghai, Tokyo and New Delhi, started during the Asian financial crisis of 1997-98, when it helped repair the balance sheets of capital-starved companies.

Since 1997, Olympus Capital has invested about $1.3 billion in about 30 portfolio companies across Asia, with a focus on China, India, Japan and South Korea.

Olympus Capital is looking again to buy assets from sellers that have come into distress during the current slowdown, a senior executive told the Reuters Private Equity and Hedge Funds Summit in Hong Kong last month. [ID:nHKG169490] (Additional reporting by Junko Fujita in Tokyo; Editing by Andrew Macdonald)