Masdar Capital, one of the five integrated units of Masdar, said today it is growing into one of the leading players in the global clean technology investment space, deploying funds globally and building a diverse international portfolio in the five years since its inception.

Updating media at a briefing in Abu Dhabi, Alex O’Cinneide, Director and Head of Investments at Masdar Capital, said: “We seek to grow and expand our status as a global player in the cleantech investment arena and are looking to be a major force for renewable investment globally. Our efforts in building an asset management business headquartered in Abu Dhabi with strong international investors are beginning to pay off. The growth of this sector will increasingly provide them and us with opportunities and we believe an excellent return profile.”

Industry statistics suggest that annual investment in the global clean energy sector registered a compound annual growth rate (CAGR) of 23% during 2004-2009, and is forecast to increase three-fold by 2030.

The first quarter of 2011 saw deals worth US$4 billion in investments from venture capitalists and private equity firms globally. In addition, total new investments in clean energy increased 30% from US$186 billion in 2009 to US$243 billion in 2010 and global renewable energy spending is predicted to touch a staggering US$461 billion by 2030.

Currently, Masdar Capital’s two major investment vehicles – Masdar Clean Tech Fund (I) and DB Masdar Clean Tech Fund (II) – together have US$540 million under management. The first fund’s investments range from solar thin-film to waste-to-energy and water purification. The second fund will concentrate on clean energy, environmental resource management, energy and material efficiency and environmental services, with its first investment completed in Chinese wind energy.

The US$250 million Masdar Clean Tech Fund (I) launched in 2006 is fully invested, targeting US$10 million-US$25 million investment ticket sizes in companies with promising technology and defendable IP. The fund has invested in a range of companies whose products and services range from solar power, waste treatment and sustainable clean-water technologies. Complementing the fund’s direct-investment portfolio, US$35 million of the fund’s capital was committed to leading early stage funds that were themselves focused on cutting-edge cleantech technology, and generally with a focus on the renewable energy sector.

Masdar Capital’s successful 2010 exits, both through trade sales and IPOs, have generated solid returns. The company exited from its investments in Germany-headquartered Sic Processing, which was sold to Nordic Capital Fund IIV, a private equity fund focused on investments in the Nordic region. The company is a leading supplier in the recovery and processing of sawing slurry in silicon wafer production, and operates sites in Norway, Germany, China, the US and Italy. Masdar Capital also exited from HaloSource through an US$80 million IPO on London’s AIM Exchange for small companies. Headquartered in the US with operations in China and India, HaloSource is a leading clean-water and antimicrobial technology company.

The DB Masdar Clean Tech Fund (II) launched in 2010 completed its final close at US$290 million. The average investment size targeted by this fund will be between US$15-$40 million. The DB Masdar Clean Tech Fund seeks out promising growth-stage renewable companies operating in most areas of the industry. Masdar Capital and Deutsche Bank Climate Change Advisors (DBCCA) are co-managers of this fund and have each committed US$50 million. The investor group, which was led by Siemens, included General Electric, Japan Bank for International Cooperation, INPEX Corporation, Nippon Oil Corporation, Mitsubishi Heavy Industries and the Development Bank of Japan. The fund primarily looks for companies whose need for capital is driven by the expansion of their existing products and services and commercialization of new technology. The fund has geographic focus on companies based in Europe, North America and Asia. The fund’s origination efforts, investment team skill sets, and approach to portfolio construction are all focused on this growth-equity strategy.

Alex O’Cinneide added: “This team of investment professionals operating for many years in the still emerging clean technology sphere has a world-class skill set and expertise. The expertise gathered, combined with our position at the heart of the Masdar initiative, is why large international investors and our partners have chosen to place funds for management out of Abu Dhabi. Over the years, we have built strong partnerships, powerful networks and a growing reputation for investment excellence. We have also developed, nurtured and equipped a growing team of young Emiratis with world-class investment skills and knowledge around origination, execution and management of cleantech investments around the world.”

With a 12-member team based in Abu Dhabi, Masdar Capital builds long term relationships with investee companies, investors and co-managers.

Industry estimates indicate growth in the new clean industries is driven by rapid depletion of natural resources, increasing environmental concerns, and global competition that is driving all businesses to remain consistently and incrementally productive with fewer resources. This opens up a plethora of opportunities for venture capital and private equity firms.

Combining deep industry insight, sharp financial acumen and operating expertise, Masdar Capital, in partnership with co-managers, identifies investment opportunities globally in the renewable energy sector. It primarily focuses on small to medium-sized enterprises that address new technologies and offerings in climate change including clean energy, environment resource, energy and material efficiency, as well as environmental services.

Masdar Capital adopts stringent criteria to ensure it creates long-term value for our investors. Before arriving at an investment decision, it gives ample credence to factors such as management quality, technology, regulatory certainty, opportunities driven by industry logic, geographic expansion, corporate governance and exit only after a three-to-five-year lock-in period.
 

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