Cleaning up on AIM

The Carbon Trust, a UK government-funded organisation committed to cutting carbon emissions in the UK, has finished assembling its board in the run-up to a £75 million listing on AIM. Robert Venes reports.

In July 2006, the Carbon Trust, an independent, non-profit organisation created by the UK government to help businesses cut carbon emissions and develop commercial low carbon technologies, announced that it intended to launch a venture capital fund investing in the low carbon and clean energy technology.
This week, the organisation said that it had completed the line-up of its board with the appointment of Gilbert Chalk as a non-executive director as it looks to raise up to £75 million (€110 million) through an institutional placing of the Carbon Trust Investments Clean Energy Fund on AIM in mid-October, advised by placement agent Altium

Shortt: listing clean technology fund on AIM in October

Peter Shortt, director of innovation and investment at the Carbon Trust and , previously founder of The Wales Innovation Fund and a director of GLE Development Capital, says that the fund will be managed by CT Investment Partners, established in May 2006 and majority owned by the Carbon Trust, with the remainder held by the investment team. Shortt works alongside two others in the team.
The fund’s board consists of Chalk, chairman Lord Turner, former chairman of the UK Pensions Commission; and Tom Delay, chief executive of the Carbon Trust and formerly of oil giant Shell and management consultancies McKinsey and A.T. Kearney.
Chalk has an extensive history in private equity, focusing in particular on small to mid-market companies. Shortt says it was important to get “someone like Gilbert, something with a real depth of venture capital experience”.
Following a period in corporate finance at Hill Samuel and Hambros Bank, he was involved in founding Hambro European Ventures, which later became Duke Street Capital after spinning out from Hambros Bank in 1998.
After that, Chalk became a partner at Baring Private Equity Partners, where he raised and managed the Baring English Growth Fund, which was acquired by specialist secondary investor Nova Capital alongside the Baring European Private Equity Fund in January of this year for an undisclosed amount. Chalk remains chairman of the fund.
Chalk was also a former council member of the British Venture Capital Association and chairman of its taxation committee, where he was involved in the development of venture capital trusts.
Having previously worked with venture capital firms including 3i, Shortt says that raising a traditional private equity fund with third party investors had been considered, but ultimately the public markets were chosen as the best route: “Two of the companies that had been invested in through government funding, of which we have had about £6.7 million, had listed on AIM successfully. There appeared to be a lot of interest from institutional investors to get exposure in this sector, so it seemed a fairly rapid and controlled way of raising money.”
Net proceeds of the placing will be invested in the emerging clean energy sectors, with a specific focus on advanced solar technologies, fuel cells, bio energy, energy storage, integrated waste to energy solutions and wave and tidal energy conversion devices. Although the sub-sectors are niche, Shortt says it was important to keep the emphasis broad, rather than focus on one particular technology. “It’s important to build up a portfolio of technologies, rather than plump for a single one,” he says.
In May 2005, the Carbon Trust commissioned a report which said that investment in the UK clean technology sector between 2000 and 2004 had grown by 30 percent year on year, with approximately half of the £1 billion invested in period provided by venture capital firms.
Shortt was unable to say whether this pace of investment had been maintained, but said that “the sector is definitely growing, and there a number of venture capital firms in the market looking for opportunities. One day, you will be competing with them, the next you might be co-investing with them”.
Currently, the team are in the early stages of negotiations for five deals, with another 30 identified as having potential. Although the fund will focus on the UK, Shortt says that opportunities across the EU will also be considered. At an estimate, he said that the fund is expected to invest in between 12 and 20 companies.
With a number of other firms closing clean technology private equity funds this year, including Zouk Ventures in the UK and Paladin Private Equity Partners and Expansion Capital Partners in the US – with the latter telling PEO recently that the number of funds focused on clean energy in Europe, the US and Asia have doubled in the last few years – there is unlikely to be a lack of opportunities or competition to fund them.