CDC backs $225m Global Environment Fund(3)

UK government-backed emerging market fund of funds CDC has invested in Global Environment Fund’s second emerging markets fund, which is its first investment in the environmental buyout firm’s funds.

 Washington DC-based Global Environment Fund’s second emerging markets environment fund has had the third close on its fund at $225 million (€168 million) and it is expected to reach a $350 million target in August 2007.

The fund is designed to meet increased demands from the developing world for energy using renewable energy sources and to help emerging market countries’ rapid urbanisation go forward in an environmentally friendly manner. Investors include families and endowments.

“The profit motive is driving investors’ interest in energy and the environmental services who see some low hanging fruit in companies like the waste services sector, driving the strong investment in the fund,” explained a banker close to the fundraising. Any altruistic motives were secondary, he added.

CDC, the UK government-backed private equity emerging markets fund of funds has committed $40 million to the fund, which is the first investment it has made in any of the buyout firm’s funds.

The UK government is believed to floating CDC on the London Stock Exchange or selling it in a trade sale for an estimated £2 billion, although at present the fund of funds can only confirm it has appointed US bank Morgan Stanley to evaluate strategic options.

Jeffrey Leonard, co-founder, president and chief executive of Global Environment Fund is also a founding member of the board of the Emerging Markets Private Equity Association and co-chair of the Advisory Board of Clean Technology Venture Network. Global Environment Fund chairman and founder John Earhart is also the managing partner for the Global Emerging Markets Forestry Fund.