GreenStream to launch China fund

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Carbon and clean energy asset management firm GreenStream Network aims to raise a €200 million ($285 million) fund to invest in projects in China. Helsinki-based GreenStream Network plans to launch the fund in early 2012, deputy CEO Tomas Otterström told Carbon Finance. “We’re focusing on three mega-trends,” he said. “China, renewable energy and climate change.” Unlike GreenStream’s existing funds, which repay their investors with carbon credits, the China GreenStream Fund will pay a cash return, targeting internal rates of return of 20%.

Whereas investors in GreenStream’s existing €170 million of carbon funds are primarily emitters, the company is to market this fund to institutional investors. And, rather than just buying carbon credits, the 10-year fund will invest in the underlying renewable energy, energy efficiency and other ‘clean energy’ projects, with the aim of generating income from carbon as well as conventional revenue streams – although Otterström noted that carbon accounts for “the key part of expected project revenues”. He conceded that the fundraising environment is challenging – France’s Natixis recently put on hold its plans for a similar fund aimed at institutional investors, despite the success of its earlier European Carbon Fund (see Carbon Finance, December 2010–January 2011, page 7).

Otterström said that the fund will be structured to both offer exposure to a rising carbon price but “the downside is capped by the minimum returns that the projects will yield,” he added, declining to elaborate. The company is working with PwC on the fund structuring. Although marketing is yet to begin in earnest, he added that GreenStream has received its first letter of intent to invest. “We’ve had a positive first response,” he said.

The news comes as Finland’s Neste Oil announced that it has made a €5 million commitment to GreenStream’s Climate Opportunity Fund, which will buy emission reductions generated after 2012.
Neste joins Estonian energy company Eesti Energia and Finnish metals firm Rautaruukki in the fund. Otterström declined to say how much they have committed in total to the fund, but said that GreenStream manages approximately €50 million in post-2012 funds.

GreenStream has also recently launched a potentially €50 million Climate Market Fund, which will actively trade carbon and other environmental commodities (see Carbon Finance, June 2011, page 6).

Latest references

Opening China markets for Sarlin

GreenStream has opened China markets to many Finnish small and medium sized companies. One of the main technology partners at the moment is Sarlin.

Shangdong Guangjun Paper – annual energy savings up to 32 %

Annual savings:

Electricity saving: 1926.6 MWh
Water saving: 18495 m3
Steam saving: 2652 t
Standard coal: 1068 TCE
Emission reduction: 2766t CO2e

Energy Efficiency for Delong Steel

GreenStream’s project saved 15 % of the compressed air related electricity costs annually for Delong Steel’s Xingtai steel mill. The technology provider was Sarlin.