A new fund could help one oil-rich, emerging economy take its first steps towards a sustainable future. The Europe-Tatarstan Clean Tech Fund [ETCF], launched by Tatarstan, a Republic of the Russian Federation, and Wermuth Asset Management [WAM], has completed its first investment stage, with more than €100 million to put into clean technology developed in Europe.
The launch, witnessed in a show of German–Russian cooperation by Russian Prime Minister, Dmitry Medvedev and German Chancellor, Angela Merkel, could help to modernise Russia’s economy over the next decade.
The fund will focus investment on companies offering technology of relevance to the region, including lithium-ion battery production for electric cars, and the growing and refining of biofuels. Projects will typically be in the €5–€25 million range, with a six year investment period and a four year wind-down period. Targeted returns are 35% per annum.
Richard Youngman, Managing Director Europe & Asia, Cleantech Group, said “One of the clear trends of today has been the rise of funds from oil-rich, resource-rich, or reserve-rich countries looking to invest in foreign clean technology companies. Foreign companies are struggling to find capital and market traction in their home bases, and yet some of the more acute environmental needs are in countries where capital is not so constrained as it is in the West.”
Tatarstan, 500 miles east of Moscow, has already been named the best business climate in Russia by both Forbes and Ernst & Young. The region, which provides tax breaks to investors in the Alabuga Special Economic Zone, is well placed to serve as a springboard for companies looking to reach the rest of the Russian market.
Michel Henriks, Senior Fund Partner at WAM, anticipates a paradigm shift to clean energy in the coming decade. “With less vested interest in old energy technologies, a region like Tatarstan is ideal for the development of clean tech companies”, he says. – Ben Alcraft
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