European investors see IPO markets opening

London, 11 March: Most European investors expect to see an increasing number of clean technology companies floated over the next 18 months, according to a survey by investor communications firm Carbon International.
In a survey of 90 clean-tech venture capital and private equity investors across Europe, 65% considered an initial public offering (IPO) in 2010 or 2011 to be “a feasible exit” for at least one of their investments.
However, given the severe lack of IPO activity over the past 18 months, 87% said exiting an investment via a trade sale was more likely than an IPO.
A large majority (87%) of respondents reported that their environmental investments are either outperforming, or performing as well as, the general market. Despite this, the survey found a strong reluctance from investors to invest in early-stage or capital-intensive companies such as wave and tidal – and this could lead to a shortage of investable companies in 2012-13.
“Our survey reveals some positives: the environmental sector is performing well and there is a strong expectation that the IPO markets will re-open,” said Tom Whitehouse, CEO of Carbon International.
“But the survey also raises concerns. The majority of investors fear that early-stage sectors, particularly capital-intensive ones such as wave and tidal power, energy storage and bio-sequestration, will fail to secure sufficient funding to grow from either private or public markets. If so, it’s difficult to see renewable energy targets being met.”
One comment from the survey read: “Current capital market weakness is reducing the flow of capital and thus fewer companies and projects are being funded. This will lead to delays in the deployment of renewable energy and will probably delay the cost reductions required for renewable energy to become more efficient and competitive with existing hydrocarbon-based energy sources.”
Investors said they were most excited about opportunities in energy efficiency, waste-to-energy and solar. Fuel cells and biofuels were ranked the least exciting sectors, although Carbon International noted they still had “hardcore fans”.
Whitehouse said that “less glamorous” environmental sectors such as recycling, waste treatment and energy efficiency had good prospects of making money on the back of EU legislation.
One firm in the electronic waste recycling sector, UK-based environCom, is presenting to the London Stock Exchange later this month to gauge interest from public equity investors.
“One of the options we are considering to raise the funds for our expansion is the public market, and AIM [London’s Alternative Investment Market] is an option that we are seriously considering,” said environCom CEO Joe Quigley. “But at this stage we have no preference for public or privately raised capital. We are keeping our options open”.
According to Carbon International, other UK companies keen to gauge interest from public equity investors include Genwat, a waste-to-energy company, biofuels company TMO Renewables and solar power installer Solarcentury.