Clean technology equity firm cuts funding target

Clean technology private equity firm Nature Elements Capital has raised US$40 million for a fund but has almost halved its fundraising goal amid tough market conditions.

The Tianjin-based company, founded by Chan Ka-keung, a former renewable energy head of Hong Kong utility CLP Holdings, has cut its target by 43 per cent as investors have turned more risk-averse due to a fall in growth in recent months on concerns that governments have to rein in spending in the United States, Europe and Japan to control runaway sovereign debt.

"This has made fundraising more challenging, but at the same time it makes investing easier as cheap assets abound," Chan told the South China Morning Post.

Chan, a former NatWest Markets and Credit Suisse banker and former head of Greater China investments at British private equity firm Climate Change Capital, said that while the bond-buying spree by the US Federal Reserve had theoretically vastly increased the supply of capital, banks had kept most of the funds and not lent it out due to risk aversion.

This has made funds for private equity investment hard to come by.

Private equity funds typically invest in cash-hungry companies that have difficulty raising money from banks. They then profit by selling their investments to the acquired firms' rivals or through an initial public offering at a later date.

Nature Elements, set up in 2009 to invest in renewable energy, energy efficiency and environmental protection, has closed the first round of fundraising for the company's first US-dollar fund.