India and China look good for clean tech investment in 2010

India and China look good for clean tech investment in 2010

By Gerry OKane Jan 12, 2010 1:37AM UTC

Just when you’ve got over that seasonal bloated feeling, the annual roll-out of statistics appears. News for the private equity and venture capital sectors in Asia is buoyant with China and India being tipped as top performers in 2010.

In spite of the recession, over $5.6 billion was invested in 557 projects under the heading of clean technology globally in 2009, according to a report by the Cleantech Group and Deloitte. Why the excitement considering the figures are below the $8.4 billion reported for the previous year? According to Cleantech it expects the deal numbers to increase by five to ten percent as late deals are reported come in, but the figure still makes a record-number of deals even if their value has dropped.

The report concluded that in light of the recession the high level of activity globally showed how important governments and companies viewed the sector and this was a good sign for 2010.

And the trends for this year look good for Asia. Already of the $4.7 billion the report said was raised from company initial public offerings (IPOs), 72 percent was raised in Asia, or rather China, a huge increase over previous years.

Now it should be said that not all figures are equal: Greentech Media, a US-based online firm involved in green tech investment, calculated the value of global venture capital investments in green tech was $4.85 billion compared to $7.5 billion in 2008. This difference in totals can be attributed to a lot of things but its trends, including those of deal numbers, reflected Cleantech and Deloitte’s figures.

And out of all this are the indication of trends for this year. The analysts think that there might be less investment in solar projects (down 64 percent in 2009), although it still takes the lion’s share in this sector, while efficiency projects were taking on a more attractive look.

Bender Consulting, a US consulting firm, predicted that the key trends in merger and acquisition (M&A)-related activity would continue impact the high technology sector for 2010, with its managing director, John Bender, saying, “While companies throughout the Asian market will continue to look to strengthen their presence in the West through acquisitions, these organisations must also contend with cultural differences that present significant challenges to achieving business success in the US.”

In particular he pointed to China’s continuing M&A activity, which has already been noted in this blog, especially to gain technology and market access in the West.

According to Cleantech, Chinese companies raised $331 million in VC investment in 2009 about the same as 2008 from 28 deals in eight industry sectors: energy generation, materials, transportation, recycling, agriculture, energy efficiency, energy storage and water and waste-water. M&A activity reached an historic high with 29 transactions totaling $5.5 billion.

India too was looking robust, raising $190 million in VC investment in 2009, down 13% from 2008 ($218 million). The report also concluded that within the clean technology sector, energy generation (biofuels) accounted for 55 per cent of the deal value. Cleantech also identified the most active investors as US-based New Enterprise Associates, a VC interested in energy storage and recycling companies and Mumbai-based Aavishkaar Venture Capital Fund.

Other firms are tipped to be active this year in India in terms of investment are IDFC Private Equity, the largest investor in the renewable energy space, private equity firm Olympus Capital and Prithvi Sustainability Innovation and Technology Fund, set to make India-centric investments.

Elsewhere in Asia, UK-based Berkeley Energy is seeking opportunities for investing its Renewable Energy Asia Fund.