Monday, February 26, 2007

Green investment, dirty money

A big day for the cleantech investment sector, with news (reported here in the Guardian) that the (new) world's biggest buyout will be of a deep green hue -
A proposed $44bn (£22bn) buyout of Texas energy firm TXU, which is tipped to be the world's largest private equity takeover, will include an environmental commitment to scale back coal power stations and limit greenhouse gas emissions.
Kohlberg Kravis Roberts and Texas Pacific are putting the finishing touches to a purchase of TXU - a power generator which has been described as "public enemy number one" by US green lobbyists because of its aggressive programme of building coal plants.
It emerged yesterday that the two private equity buyers have held talks with environmental groups to win support for the takeover. To the delight of green organisations, the buyers have offered a radical change in direction - including scrapping seven of 11 new coal power stations and implementing clean air initiatives.
It was also hailed by green campaigners yesterday as a sign that powerful Wall Street and private equity financiers are taking environmental issues more seriously and that they recognise that polluting projects have become a significant business risk.
Tony Juniper of Friends of the Earth said the proposed deal made it clear that going low carbon would be one of the big business drivers of the next decade.

(later reports suggest the deal is pretty much sewn up).

The Guardian's headline - Private equity plays the green card in US - reflects the tone of the current row in the papers about private equity and its role in asset-stripping and anti-worker practices. While there's certainly questions about the activities of some of the big highly-leveraged deals, it's a shame to tar the whole industry which does provide some economically and socially desirable services in supporting innovative businesses or rescuing failing ones.

The current complaint about some VC grandees providing donations to the Labour party seems particularly daft. Of the names accused, I don't know Nigel Doughty or Jonathan Aisbitt, but Ronald Cohen is definitely one of the good guys - for a feature about socially-focused VC, including an interview with Cohen, I wrote back in 2003, see here.

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