Tuesday, May 20, 2008

Flowers In Their Hair?

It has always been an uneasy alliance between commerce and the environmental community, but it seems, even in this time of hightened awareness and high oil prices, that there has been a decline in investments in clean technology.

According to research group New Energy Finance, private equity investment in clean energy solutions dropped by more than two thirds for the first quarter of this year. Dropping from $2.5bn from $3.7bn in the same period last year, commentators are blaming the credit crunch and global jitters for the decline.

Buyout groups are the main culprits with private equity investment slipping by 65%. Venture capital groups, however, increased investment from $1.2bn to $1.5bn compared to the same period last year.

"Some assets are overvalued with too much money chasing too many transactions in venture capital. There is more supply in the market than last year, with investors paying top prices for assets" said Mortimer Menzel, partner and head of merchant bank Augusta & Co's renewable energy practice.

"Vendors recognise there is a boom and want to sell to capitalise on high valuations" he added.

Initiatives are on the go, however, with Kohlberg, Kravis, Roberts, the buy-out giant, last week pledging support for the global green agenda after teaming up with Environmental Defense Fund to improve the environmental performance of KKR's portfolio companies.

Companies will, no doubt, begin to increasingly focus on this area when the markets return to normal, with several firms setting up dedicated investment departments to seek out opportunities.

I can't see the board of Kohlberg, Kravis, Roberts sitting at Glastonbury with flowers in their hair smoking 'herb' but they and others are definately taking this market, and this issue, seriously.

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