Hudson plans largest RMB clean energy fund

Hudson, which is raising the fund in partnership with the Yangzhou municipal government, hopes to begin investing this year. It will target companies in the wind and solar energy, biofuel, biomass, and energy efficiency and storage companies segments.

Hudson's portfolio to date includes European- and US-based assets, but Co-managing Partner Neil Auerbach told Reuters that approximately $70 million will be invested in China from the firm's US dollar-denominated fund to kick off China operations. Hudson opened an office in Beijing earlier this year.

The structure of these upcoming deals will lay the foundation for future investments in Asian markets such as Japan, Auerbach explained. The current thinking is that investments from the US-dollar and renminbi vehicles will be substantially smaller than those typically made in the West, with deals in the $20-50 million range.

Hudson is just one of many private investors looking to finance China's green energy and cleantech boom. The country attracted $54.4 billion worth of private clean energy investments in 2010, up 39% from 2009, according to research by the Pew Environmental Group. Total cleantech investment in China accounts for more than 20% of investment in the sector worldwide.

Funds are drawn to the country by the substantial policy and financial support that has been pledged by the government. Beijing wants non-carbon fuel sources to meet 15% of national energy demand by 2020 and targets have been set for reducing carbon and energy intensity. It is now generally accepted that China will have to alter its energy consumption patterns if it is to sustain rapid economic growth.

Cleantech and renewable energy-specific funds remain few in number, with sources previously airing concerns that clean energy portfolio companies alone won't deliver returns. While some funds have added technology mandates to their cleantech funds in order to broaden investment options, Tsing Capital Funds remains true to its initial objective. The firm's first China Environment Fund raised $13 million in 2010; eight years later, a fourth vehicle is in the pipeline with a target of $350 million.

Meanwhile, the Yiyun Clean Technology Fund, Tsing's debut renminbi-denominated fund, has accumulated $500 million since its 2009 launch.

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• Topics
• Greater China
• Cleantech
• Renminbi fund
• Hudson Clean Energy Partners