Through the summer of 2008 (before the big crash) cleantech investors saw excellent returns, according to the 3rd annual European Clean Energy Venture Returns Analysis (ECEVRA). UK-based New Energy Finance in collaboration with the European Energy Venture Fair completed the analysis.
The study looked at the returns achieved by 54 participating investors managing 84 funds which invested in 302 companies.
Among the key findings:
- High performance sectors include biomass, biogas & waste-to-energy, fuel cells (particularly in Europe), and recycling & waste management.
- Of the 375 investments covered by ECEVRA 2008, thus far 26 have resulted in public listing and 32 have been exited or partially exited via M&A. The rate of failure is relatively low with only 7.5% of all investments being liquidated or written off.
- The pooled cumulative gross IRR achieved on investment in clean energy and clean technology companies in Europe and North America is 67.7%. However, with relatively few exits under their belts, much of this is due to the value of unrealised holdings.
- The IRR on all fully exited investments, including liquidations and write-offs, is almost 60%.
- The overall exit multiple of investments which have been fully exited via public market listing or M&A since January 2007 is 2.8 times the original investment with a time to liquidity of 2.5 years.
These results are based on data collected before October’s market slump; venture exits are likely to be few and far between until the economy stabilizes.
"The current market turmoil will clearly have an impact on the value of unrealised portfolio companies. But it also creates much healthier valuations for investors with funds to deploy," says Michael Liebreich, New Energy Finance CEO. This is the point in the cycle when the best investments will probably be made. The fundamental drivers – climate change, energy security, oil depletion and new technologies are still with us. It will be fascinating to see how this returns picture evolves over the coming year."
About the European Clean Energy Venture Returns Analysis:
The European Clean Energy Venture Returns Analysis was commissioned by the organizers of the European Energy Venture Fair.
Companies with venture-type investments in European clean energy technology and service providers were invited to submit data in confidence to a team at New Energy Finance, who analysed it on an anonymous basis.
The data related to investments in portfolio companies located in Europe, irrespective of the location of the investor. Buyout-type transactions were excluded, as were renewable energy or biofuels projects.
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