Origo and Ecofin announce launch of China Cleantech Partners
20 September 2011
Category: News, Asia, China, Europe, United Kingdom
Origo Partners Plc and Ecofin Limited have announced the formation of China Cleantech Partners, LP (CCP), a US$200 million private equity fund which will invest in China’s cleantech sectors.
CCP aims to provide its limited partners with above market returns from investments in privately-held Chinese cleantech companies, with a specific focus on alternative energy, environmental remediation, water, and energy storage and distribution.
CCP will invest either directly in target companies, or indirectly as a limited partner through the Origo Xinxiang Renewable Energy Fund, LP (the Xinxiang Fund). The Xinxiang Fund is a 500 million yuan (US$78.27 million) yuan-denominated limited partnership established by Origo and the Municipal Government of Xinxiang. The Xinxiang Fund, which has received all relevant regulatory and governmental approvals, has received a 125 million yuan commitment from the Xinxiang Government’s investment vehicle, the Xinxiang Investment Group, and CCP expects to invest the balance of 375 million yuan. As a result, CCP will have a flexible and unique dual US dollar/yuan structure which has the potential to provide:
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Improved access to investment opportunities which would otherwise not be available for regulatory and/or competitive reasons;
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Timely exits from CCP’s investments, via local Chinese capital markets to benefit from their attractive pricing when appropriate;
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The ability to pool the CCP’s US dollar-denominated capital raised from international investors with yuan-denominated capital raised domestically from Chinese investors; and
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An alignment of interests between CCP and the Chinese government providing channels to secure limited partnership commitments from Chinese government entities – e.g. Origo’s partnership with the Municipal Government of Xinxiang.
Origo and Ecofin Water & Power Opportunities plc, a UK investment trust managed by Ecofin, have each made an initial commitment of US$15 million to CCP (approximately 97 million yuan). CCP is expected to reach an initial closing later this year when it has achieved US$75 million in partnership commitments and will be managed by a newly registered entity, which will be jointly owned on a 50/50 basis by Origo and EFMI Limited, an affiliate of Ecofin. EFMI’s ownership of the management entity is subject to regulatory approval, which is pending. Final closing is expected in 2012 when CCP has achieved US$200 million in partnership commitments.
Commenting on the announcement, Chris Rynning, chief executive of Origo, said: “We are delighted to launch this product together with Ecofin, an established asset management firm with strong investor relationships and long-established expertise in the global utility, energy, and alternative sectors. Coupled with our on the ground presence and execution abilities in China, we believe this partnership will form the basis for a highly differentiated approach to identifying, investing, and supporting the most exciting Chinese cleantech businesses set against the backdrop of an increasingly global supply chain and competitive environment.
“The receipt of all approvals for the Xinxiang Fund is a significant landmark for Origo in the development of our business and we continue to work with other branches of the Chinese Government to identify and develop opportunities to launch further yuan-denominated investment vehicles.”
Bernard Lambilliotte, chief investment officer of Ecofin, said: “CCP offers international investors a unique channel to gain exposure to one of the most exciting cleantech markets in the world. The fund’s dual US dollar and yuan structure, backed and supported by the Chinese Government, gives CCP and its investors access to both offshore and on-shore investment opportunities, thereby opening up a bespoke approach in facilitating exit opportunities in both domestic and international capital markets. Origo’s local presence, track record and expertise in the cleantech area make them an ideal candidate to partner with in this venture.”