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 January 19, 2012
Abu Dhabi investment fund targets UK waste sector

 The investment arm of Abu Dhabi's green energy company, which commands over $540m of capital, has revealed it is "very interested" in the UK waste sector.

While solar and wind energy may get the most attention, waste management technologies offer the opportunity to scale up to commercialisation more readily, Alex O'Cinneide, general manager of Masdar Capital,said.

"We are very interested in the UK waste business," he said in an interview at the World Future Energy Summit in Abu Dhabi. "Waste is a huge problem everywhere, [but] the UK gives us concentration of population in various different areas. The landfill tax which is making it very difficult to use landfill -- correctly -- means there has got to be other ways to process that waste."

He added that Masdar had spent "a lot of time" looking at the UK waste sector and has held talks with a number companies in the market, although it is yet to close its first deal.

Masdar Capital already owns waste management assets across the globe, including a plant in Los Angeles processing bio-solids, a North American glass recycling business, and a solid waste processing facility in Bordeaux, France.

It runs two clean tech funds, the first of which, established in 2006 and worth $250m, has been fully committed, while the second raised $265m in January 2010 from institutional investors including Siemens and GE.

The strategy, according to O'Cinneide, is to invest $15m to $25m from the second fund in "businesses we can scale to a large addressable market with a good management team in a very defined sector".

In addition to targetting the waste sector, these criteria have also led the investor to look at firms specialising in speciality chemicals and materials processing with O'Cinneide revealing that a deal is expected to be announced very shortly.

"We are surrounded by things with toxins in, and they are going to start being slowly legislated out," he explained. "So there are companies thinking about how we get the same properties -- that clarity of glass, that colour of plastic -- how do we get those compounds which are non-toxic. I think that's a massive opportunity for investors, so we're thinking about things like that."

While the focus of many investment funds is turning towards Asia and the Middle East, O'Cinneide rejects the idea that Europe is no longer a good investment.

"We're still looking at opportunities in Europe. In fact, we have three deals in our pipeline right now from Europe," he said. "Europe has excellent technology companies, it's a huge market, it's the leader in growth -- what Germany's done for renewables is unbelievable -- it has amazing companies and there's going to be millions of opportunities there. It's a major focus for us."

This was aptly demonstrated by a deal signed with the Development Bank of Japan (DBJ) on Monday to invest "significant capital" in solar PV and onshore wind energy projects in North America and Western Europe. Over 1GW of operational solar and wind assets has already been identified and O'Cinneide expects deals to be announced this year.

However, O'Cinneide admits that European governments' penchant for chopping and changing renewable energy policies is undermining investor confidence.

"Investors don't necessarily want good news or bad news -- what they want is stability of policy," he said. "I actually don't care [from a business point of view] if the UK government has this support policy or doesn't. I just want to know it's the same for the next five years, because then I can build a case on whether to do [a project] or not. We just need to see stability, because then we can plan better."