North America-Based Private Equity Investors’ Appetite for Clean Technology – November 2014

by Joseph Borda

  • 12 Nov 2014
  • PE
  • NR

Clean technology has emerged as a widespread term encompassing a number of industries including environmental services, renewable energy and sustainable or green products and services. Clean technologies are known to improve lives in both developing and developed countries. According to Preqin’s Investor Intelligence online service, there are currently 736 North America-based investors that are investing or targeting the clean technology industry. These institutional investors have aggregate assets under management of approximately $20.9tn. 

Foundations and private sector pension funds represent the largest proportion of North America-based LPs that have previously invested in, or currently show an interest in, clean technology funds, accounting for 21% and 20% of investors respectively. Public pension funds are not far behind, making up approximately 18% of LPs. Endowment plans and private equity fund of funds managers follow, with each making up 10% of investors in the industry. 

Geographically, these North America-based clean technology industry investors have fund focus preferences all over the globe. Preqin data illustrates that an overwhelming 93% of North America-based LPs within the industry seek investment opportunities domestically. These LPs also show interest in opportunities in Europe (70%), Asia (60%) and emerging markets (52%). Additionally, North America-based private equity investors remain the most prominent players in the industry, accounting for 45% of global LPs that target clean technology funds. Europe-based LPs are close behind, with 33% of known active clean technology investors, followed by emerging market- (12%) and Asia-based investors (11%). 

Five of the 10most active investors in clean technology, based on the number of previous commitments, are LPs located in the US. However, the most prominent investor in clean technology, having previously invested in 60 funds, is Luxembourg-based European Investment Fund, a private equity fund of funds manager. 

In recent years, the increase in consumer demand for energy has increased the importance of clean technology. North America-based private equity investors will continue to target the clean technology industry over the coming year, as the average current allocation (10.8%) is slightly below the average target allocation (11.4%).  As technological advances in clean technology continue to push the industry forward, interest from private equity investors will only continue to grow and expand worldwide.

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