New private equity funds of funds that focus solely on cleantech investments are, on average, looking to raise considerably more capital than similar vehicles have secured in the past. Preqin’s data shows that since Robeco Sustainable Private Equity completed fundraising in July 2006, the average cleantech fund of funds has closed on USD 173 million in capital commitments. If the cleantech vehicles that are currently raising capital were to close on target tomorrow, the size of the average cleantech fund would rise to almost USD 300 million.
However, recent history has shown that it is far from certain that managers of cleantech private equity funds of funds will achieve their targets successfully. A number of vehicles focusing on the sector had been expected to commence investing in 2009 but the financial crisis at the end of 2008 led to a decline in the private equity fundraising market. This resulted in several cleantech funds of funds prolonging capital raising efforts, while some managers abandoned plans to launch vehicles targeting the sector. Just one fund of funds, BPE Fund Investors III Cleantech, has been identified as having a 2009 vintage.
Analysis in the 2011 Preqin Private Equity Cleantech Review shows that Europe is home to more cleantech funds of funds than any other region. Despite this, North America is the key focus for many managers targeting the sector, with cleantech funds of funds intending to allocate more than half of committed capital to the region on average. Preqin’s data also shows that funds of funds dedicated to the cleantech sector tend to allocate a significantly larger portion of capital to direct co-investment opportunities than private equity funds in general.