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Masdar seeking to invest in China

ABU DHABI, United Arab Emirates - Masdar Capital, the investment vehicle of the Abu Dhabi state-owned renewable energy company Masdar, is looking for investment opportunities in fuel cells and water treatment in China, senior executives said.

The private-equity company, which manages assets worth $520 million through its Masdar Clean Tech Fund and DB Masdar Clean Tech Fund, is in talks about a possible investment with a Chinese fuel-cell maker and a water-treatment company, according to Alex O'Cinneide, general manager of Masdar Capital.

Fuel cells are devices that use chemical reactions to generate electricity.

The private company, which works mainly on clean-technology projects, invested $15 million into a Chinese wind-farm developer - UPC Renewables China Ltd - in late 2010. That was the first investment made by the $298 million DB Masdar fund, which was established in January 2010.

In a financing round completed in January, UPC Renewables, which has a wind-power capacity of 10 gigawatts (gW) in its 34 projects throughout China, attracted $60 million in investment from Global Environment Fund, CIAM Group Ltd, Macquarie Bank and other private-equity companies, as well as Masdar Capital.

The capital from Masdar is being used to build new wind farms, O'Cinneide said. He said the company generally takes up to six years before it leaves a project.

So in the case of UPC Renewables, "we're in no hurry to exit", O'Cinneide said, adding that global conditions are now favorable for initial public offerings, which provide exit opportunities.

Masdar Capital's successful exits in 2010, both through trade sales and IPOs, have produced good results. The company exited from its investments in the Germany-based Sic Processing, which was sold to Nordic Capital Fund IIV, a private-equity fund that concentrates on investments in the Nordic region.

The Chinese market for clean technology is set to grow as the country tries to reduce its carbon intensity - or the amount of carbon it emits for each unit of GDP - by 17 percent in the five years leading up to 2015.

In a keynote speech delivered at the Fifth World Future Energy Summit Opening Ceremony in January, Premier Wen Jiabao said China is dedicated to burning less coal and using more natural gas and renewable sources of energy.

The proportion of non-fossil fuels that China uses among all of its primary energy is set to grow to 11.4 percent in 2015 from 8.3 percent in 2010.

China is set to spend $473.1 billion on clean energy in the next five years and plans to add 370 gW of renewable energy generation capacity by the end of 2020, according to Masdar.

In addition, Masdar Capital is also considering bringing the products and services of its portfolio companies in North America and Western Europe to China by working with local partners, O'Cinneide said.

Web link:http://www.chinadaily.com.cn/cndy/2012-02/08/content_14556255.htm


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© Lehman, Lee & Xu 2012.
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