September 30, 2008 / 12:44 PM / 11 years ago

Cleantech fund delays capital raising on turmoil

LONDON (Reuters) - British cleantech investor Low Carbon Accelerator (LCA) has postponed fund raising plans in the wake of financial market turmoil, the company said on Tuesday.

LCA raised 44.5 million pounds ($80.21 million) in 2006 on the alternative investment market (AIM) of the London Stock Exchange, to invest in fast-growing companies which curb carbon emissions from buildings and energy.

It had planned a new capital raising but will instead focus on deploying its remaining 14 million pounds capital into companies it has already invested in, and then raise cash from sales of these.

This follows a more difficult environment to raise money on public markets, even for a renewable energy sector widely considered a safe, long-term bet given public support to fight climate change and improve energy security.

“The fund managers have got redemptions coming out of their ears, have got holdings in big stocks which theoretically are their safe holdings and which are now tumbling, and they’re all taking a defensive position,” LCA Chief Executive, Mark Shorrock, told Reuters.

“Let’s get an uplift in our portfolio asset value... and then let’s go to the market when we have something which is really counter to what’s going on all around us.”

LCA’s new emphasis on supporting its existing investments underscores concerns about possible contagion from the credit crisis on growth in the renewable energy sector, despite subsidy support.

For example one of companies LCA invests in, Living Villages Holdings, focuses on climate-friendly residential development and has been affected by a downturn in land values.

In addition, many industrialized and developing countries are relying on a rapid expansion of renewable energy to help fight climate change, which in turn will depend on a big influx of debt and equity finance.

Shorrock said that debt finance remained available for renewable energy projects, given the guaranteed price premium for “green electricity” in many countries, but that there may be an equity funding gap for medium-sized projects below the radar of big private equity firms.

Reporting by Gerard Wynn; editing by James Jukwey

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