Hudson Clean Energy makes China debut
Asia Pacific's waste-to-energy market is projected to grow threefold in the next five years and China is central to this trend. Cleantech consultancy Pike Research expects the country’s revenues to hit $3.7 billion by the end of the period, up from just over $1 billion in 2011.
China is already home to Asia's largest single line waste-to-energy plant - GSE Investment Corporation's (GSEI) flagship project in Beijing - although the industry growth rates suggest this title might change hands several times within the country over the next few years.
Hudson Clean Energy Partners was sufficiently impressed by the prospects for the industry, and GSEI in particular, that it committed a reported $55 million for a minority stake in the company earlier this month. The investment, made through the private equity firm's $1 billion global fund, represents its first in China. Another is expected to follow and Hudson also plans to launch a renminbi-denominated cleantech vehicle in association with the Yangzhou municipal government.
"We weren't looking at waste to energy specifically for our first investment, it just so happened that this is a high-caliber asset," Neil Auerbach, Hudson Clean Energy's managing partner, tells AVCJ. "It has a great majority investor, a strong existing management team, and a very attractive portfolio with some of the best waste-to-energy assets that we've seen."
The majority investor is South Korea-based MBK Partners, which took a stake in the company in December 2009.
China's waste-to-energy industry is a byproduct of urbanization - a principal driver of its economic growth. The expansion of cities contributes to rising disposable incomes, but also leads to increases in energy consumption and output of municipal solid waste. Most of the waste currently ends up in landfill, and space is at a premium. Waste-to-energy conversion therefore offers a partial solution to both problems.
The urbanization story also figures strongly for GSEI's other primary business line: wastewater treatment. There are considerable opportunities for private companies in this space, operating under the buy-operate-transfer model, and China's municipal wastewater treatment ratio has risen from 34% in 2000 to 70% in 2010. The number of plants has tripled during this period.
"China has considerable needs in these areas - there is a scarcity of land and water resources," says Auerbach.
In all, GSEI owns and operates a portfolio of 11 assets across China,. Hudson's capital will be put towards several expansion and greenfield projects, and the firm will get a seat on the GSEI board. The expectation is that it will bring international cleantech expertise to the table.
"We came to China hoping to add value as investors," says Auerbach. "The country already has plenty of capital."
More on Greater China
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.