JPMorgan Chase in EcoSecurities takeover bid

Robin Pagnamenta, Energy Editor
JPMorgan Chase, the American investment bank, has made a £123 million takeover bid for EcoSecurities, an Irish carbon offset group, thwarting an earlier offer from the group’s co-founder.
The deal, at 100p per share, represents a 120 per cent premium to EcoSecurities’ share price in June, before the initial offer period began. It comes amid mounting interest in the sector before pivotal United Nations talks in Copenhagen in December, which are expected to deliver a significant boost for the global carbon market.
Carbon Acquisition Company, which is a subsidiary of JPMorgan Chase Ventures, said that it had received a recommendation from the board of the Dublin-based EcoSecurities, as well as acceptances from holders of almost 20 per cent of EcoSecurities’ shares.
EcoSecurities previously had rejected as “wholly inadequate” a revised 90p-a-share offer from Guanabara Holdings, a company established by Pedro Moura Costa, EcoSecurities’ co-founder.
Mr Costa, who stepped down from the board of EcoSecurities in April, has been hailed as one of Britain’s first eco-millionaires. He was working as a forester in Malaysia when he saw the potential for an international carbon credit market and founded the company, which is now a leader in the field, in 1997.
Yesterday, Guanabara said that it was considering its options. It would need the support of 50 per cent of shareholders for its offer to succeed.
In a move aimed at derailing a potential counterbid from Guanabara, Carbon Acquisition Company said that its acceptances would remain binding in the event of a competing offer being made.
Shares in EcoSecurities, which was listed on the Alternative Investment Market in 2005, rose sharply after the announcement and closed at 101½p yesterday. The company is active in a number of areas. In addition to buying and selling carbon emissions credits, it advises companies on methods to reduce their carbon intensity. It is also a developer of low carbon projects in the developing world that form part of the Kyoto Protocol’s Clean Development Mechanism, which allows companies to export cuts in greenhouse gas emissions to lower-cost countries, such as China and India. EcoSecurities has backed such projects in a variety of countries, including Brazil, Honduras, China and Costa Rica.
The UN Clean Development Mechanism allows emission-reduction projects in developing countries to earn certified emission-reduction (CER) credits, each equivalent to one tonne of carbon dioxide. These can then be traded and sold, and used by industrialised countries to meet a part of their emission-reduction targets.
EcoSecurities was a pioneer in the carbon market and has built up one of the largest portfolios of these emission-reduction projects in the world, with about 447 projects in its pipeline, capable of producing 124 million CER credits. That accounts for more than 10 per cent of the total of 4,200 projects.
According to figures from the World Bank, the value of the global carbon market doubled in size last year to an estimated $126 billion (£76 billion), even as Lehman Brothers collapsed and credit markets froze in the final months of the year.
Some analysts have estimated that the market could be worth as much as $3 trillion by 2020, although much depends on whether global policymakers can reach a workable deal in Copenhagen on the restriction of global emissions.
In 2007, Credit Suisse invested about €44 million (£39 million) in EcoSecurities, equivalent to about 9 per cent of the company’s issued share capital.