Published: February 13, 2012
New fund secures €110mn.
Wermuth Asset Management has closed a deal with the Republic of Tatarstan to support companies battling climate change and other related environmental issues in Russia.
The Tatarstan Cleantech Fund (TCTF), managed by Wermuth, has raised €110mn (US$145mn) – €100mn from Tatarstan’s sovereign wealth fund and €10mn from Wermuth.
TCTF will be managed by Daniel Colbert, who joined the Russia-focused German asset manager last year after its senior partners explained their plans to develop such a fund.
Colbert, who has worked at Carbon Nanotechnologies, NGEN Partners and the Institute for Energy Efficiency at UC-Santa Barbara, liked what he heard and accepted the task of managing the fund. When he spoke to EMEA Finance in early February he had started a series of roadshows to meet international investors and hoped to raise a further €90mn.
If interest is high for the fund, which is planning its first close by the summer, he says that it could be worth up to €250mn. “It is a bit too early to tell, but from the discussions and meetings we have had there is substantial interest,” he says.
TCTF will invest in small and medium-sized cleantech companies in Europe and the US that could sell into or start production in Russia or Tatarstan. The fund, which targets returns of 30% a year, has a six-year investment period to be followed by a four-year wind-down.
After the oil has gone
“A watchword in Russia is modernisation,” says Colbert when explaining why he agreed to lead the fund. Russia is some 15 years behind the West in many technological areas, he adds, and that means bringing in not only investment dollars but also new technologies to catch up: “This fund has been designed to bring technology to the region as an answer to that problem.”
The problem has been created by an over reliance on oil and with Tatarstan’s oil fields now three-quarters depleted the government is keen to develop new industries. “They recognise the need to get ahead of the curve and reinvent their economy before the oil runs out,” Colbert says.
And the economy will certainly benefit from Wermuth’s latest fund. Russia and Tatarstan use 11 times more energy than Germany to produce a unit of GDP, so applying clean technologies would have a greater benefit on the region than if they were applied in Western Europe or the US.
For the TCTF to achieve its full potential it needs private investment. It remains to be seen if Colbert can persuade investors of the fund’s potential in the same way he was persuaded by Wermuth’s senior partners.