Deal focus: Asia Green Fund secures DuPont carve-out

Asia Green Fund had been tracking DuPont for several years as part of its search for technology assets that can deliver positive environmental impact. When the US chemicals giant deemed its clean energy unit non-core and launched a sale process, the Chinese private equity firm didn’t hesitate in participating.

Completing a cross-border deal, however, required overseas partners. Credit Suisse offered an M&A loan to cover about half of the deal and San Francisco-based Tensile Capital Management contributed preferred equity financing, but the key equity contributors were BroadPeak Global and Saudi Arabia’s Dussur.

Asia Green Fund knew BroadPeak well, having collaborated with the New York-based special situations investor on a steel industry restructuring fund in 2017. The BroadPeak team – then part of W.L. Ross – participated alongside Baowu Steel Group and China Merchants Group. The project was a success as Chongqing Iron & Steel, the sole portfolio company, returned to profit within a year. An exit came in 2019.

The $510 million acquisition of DuPont Clean Technologies deal was agreed earlier this month and is expected to close in the second quarter of 2021. The business is a global leader in sulfuric acid production, as well as having technology for desulfurizing motor fuels and producing clean gasoline and making air pollution control systems.

“DuPont is a nearly 100-year-old business. It has accumulated a lot of talents and represents the world's highest level of technology. Through our preliminary research and communication with some customers, we established that its technology can be used in a wide range of industries,” says Bo Bai, chairman and CEO of Asia Green Fund.

While BroadPeak will take care of the US part of the business, Asia Green Fund will drive expansion in Asia, especially in China. Dusser – an investment platform launched by Saudi Arabia’s Public Investment Fund, Saudi Aramco, and Saudi Basic Industries Corporation – will take responsibility for the Middle East. Saudi Aramco and Saudi Basic are both seen as potential customers for the newly independent company.

One-third of Clean Technologies’ business is already in Asia, with China the main geography. The first landing project for its most advanced technology is in Hubei province, the epicenter of COVID-19 pandemic. Relying on virtual reality communication tools, among others, the factory is producing sulfuric acid with nearly zero carbon emissions. Sulfuric acid is used in fertilizers and to extract lithium from spent lithium-ion batteries in electric vehicles.

“LPs in our renminbi funds include state-owned enterprises such as Three Gorges Group, Huaneng Power International, China National Petroleum Corporation, and Ansteel Group, as well as some private enterprises focused on green development, including Trina Solar and Envision Energy. This transaction is important to us. It’s a good fit with our LPs’ demand for green development,” says Bai.

Founded in 2016, Asia Green Fund has RMB15 billion ($2 billion) in assets under management across one renminbi-denominated fund and two vehicles co-managed with third parties. Fund I closed at RMB3.2 billion in December 2018. It has generated an IRR of 23%, a 1.7x multiple, and distributions to paid-in (DPI) of 0.23.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Buyouts
• Industrials
• North America
• Cleantech
• China
• Asia Green Fund
• Chemicals