Once found only at the margins, developing markets and clean energy funds are now moving closer to the mainstream. One UK-based group is at the forefront of convergence between the two, with a new $1 billion (€790 million) carbon fund for investing in emerging markets.
That group is Climate Change Capital, founded in September 2003 by James Cameron, Gareth Hughes and Mark Woodall. The specialist merchant banking group employs 90 people to help it deploy capital and advice specific to addressing climate change.
“Three years ago, people might have questioned whether we wanted to nail our colours to such a defined mast,” says Woodall, CCC's chief executive officer. “In retrospect, it was a good decision.”
Investors have flocked to CCC's latest global carbon fund – which has thus far raised $830 million of its targeted $1 billion, mostly from pension funds, corporates, and specialist investors.
The new fund will invest a significant portion of its capital in the world's largest market of China, says Woodall. It will also dip into other developing markets, with the BRIC countries (Brazil, Russia, India and China) likely to account for at least 80 percent of the total allocation of capital.
According to Woodall, the anticipated returns for the global carbon fund are in line with investors' expectations for top-tier emerging market private equity funds, which typically fall around the 30 percent IRR mark. “We manage risk through diversification and hedging and other derivatives such that we have a balanced portfolio,” says Woodall. “The returns of the first fund have not been duly influenced by the volatile market movements earlier this year.”
Currently, CCC operates out of offices in London, Washington DC and Madrid, and is slated to open a Beijing office this month.
ASHMORE RAISES THIRD GLOBAL DISTRESSED FUND
London-based Ashmore Investment Management has reached a first close on $1.3 billion (€1.01 billion) for its Global Special Situations Fund 3. The firm says some additional investors may come in, but the fund is now ready to begin investing. The new fund will aim for a portfolio of 13 investments, averaging $100 million, across the developing markets. Ashmore invests in debt, public equities and special situations in the emerging markets, and had $21.4 billion under management at the end of July.
BRAZILIAN FUND SEES 7X CHEMICALS EXIT
BPE Investimentos, a São Paulo-based private equity unit of Brasilpar, has exited its stake in Getec Guanabara, a sucro-chemical company. The exit provided a seven times return for BPE, according to Duncan Littlejohn, a partner at the firm. The stake was sold to a subsidiary of Polyols, a company owned by Corn Products Brasil and UK corporation SPI.
NEWBRIDGE TO REAP 4X ON COLOMBIA EXIT
ACON Investments, a Washington DC-headquartered private equity firm affiliated with Texas Pacific Group, has agreed to sell its stake in Carulla Vivero to Almacenes Éxito, Colombia's largest retailer. The transaction values Carulla Vivero – Colombia's second-largest retailer – at more than $700 million (€546 million) including debt. ACON began investing in Carulla Vivero in 1998 through the $160 million Newbridge Andean Partners LP fund.
SAM ZELL ENTERS SOUTH AMERICAN RETAIL
Equity International has made a $50 million (€39 million) investment in Santiago-based Parque Arauco, which develops and manages malls in Chile, Argentina and Peru. The deal is subject to regulatory and shareholder approval. Parque Arauco shareholders were scheduled to vote on the share offering on October 2. If approved, Equity International would hold approximately 12.5 percent of the company. Equity International is a private equity real estate firm affiliated with Sam Zell.
IFC INVESTS IN MEXICO, TRINIDAD
The International Finance Corporation, the private investment arm of the World Bank, has committed to invest up to $45 million (€35.6 million) of equity in Mexico's Banco del Bajio. The investment will be directed toward expanding the lending activities of Bajio, a regional bank targeting small and medium enterprises, agribusiness and commercial banking. Separately, the IFC has provided a $50 million subordinated loan to Guardian Holdings, an insurance group in Trinidad and Tobago. The quasi-equity investment will be used to support Guardian's expansion into the Central American market.
US-BASED RWANDA VENTURE FUND MAKES FIRST DEAL
Thousand Hills Venture Fund has made its first investment by backing Rocket 2020, which provides products, services and IT connectivity for small businesses across Rwanda. THVF is a Denver, Colorado-headquartered venture capital fund that invests in small and medium-sized enterprises in Rwanda.
ABRAAJ BACKS JORDANIAN BANK
Dubai-based buyout firm Abraaj Capital has purchased a 10.7 percent equity stake in Jordan National Bank through the $129 million (?101.5 million), 2005-vintage Abraaj Special Opportunities Fund (ASOF) II. Through the transaction, Abraaj invested $56 million to acquire 11.8 million shares in JNB, which is listed on the Amman Stock Exchange. Founded in 1955, JNB provides retail and corporate banking services and has a presence in Jordan, Lebanon, Palestine, Cybrus and the UAE. The transaction has received the approval of the Jordanian Exchange Commission.
GP BACKS BRAZILIAN RESTAURANT CHAIN
GP Investimentos, a Brazilian investment manager, has invested in Fogo de Chao Churrascarias, a local restaurant chain. GP is investing $32 million (€25 million) of the total $64 million committed by an investor consortium that will acquire a combined 40 percent stake in Fogo de Chao. Fogo de Chao has three Brazil units and six in the US. The all-you-can-eat restaurant chain anticipates opening a number of new restaurants in the US and one in Brazil before the end of 2006.