We started raising the first fund in early 2004 and had the final launch of the fund in April 2005. It was a long twelve months!
My partner Jean Pascal Tranie and I quickly learned that fundraising from traditional institutional investors was not going to be easy. Whilst there was a lot of interest in our strategy, being a first-time fund we did not tick the necessary boxes such as fund size, track record etc. In addition there was a lot of scepticism as to whether there were enough investment opportunities in the environment sector and whether this was a long term trend that could yield venture capital like returns. We ended up raising our first fund primarily from family trusts and wealthy entrepreneurs who believed in our vision and trusted Aloe's management team.
It is incredible how much can change in three years. Climate change has taken center stage for politicians, and environmental issues have captured the imagination of the general population. This has filtered through to the investment community and the term “cleantech” is now being widely used. Institutional fund of funds dedicated to investing in the cleantech sector are mushrooming.
We no longer have to spend the start of our fundraising presentation educating investors on the merits of carbon credits, wind, solar, recycling etc. The cynicism of cleantech investing is fast disappearing and more than half of Aloe Environment Fund II consists of institutional investors. Of course, delivering on our business model and strategy and making great investments over the past two years has helped significantly.We now have a successful track record.
Our strategy developed from realising that Europe has, over the past three decades, led the way when it comes to sustainable living and environmental technologies. However, a vast number of these technologies were not finding their way to the markets which needed them the most, namely China and India. It frustrates me immensely how slow some companies are to recognise that the environmental problem is a global problem and not isolated to one geographical location.
The Aloe strategy lies in two simple rules. Number one, we invest in European companies who have proven environmentally beneficial technologies or solutions who wish to expand into the fast growing developing Asian countries; number two, we work with our portfolio companies as partners and not just as financiers. Most of the Aloe team members are experienced successful entrepreneurs. Hence we try our hardest to provide not just the financial investment to make the transition but also our contacts, networks and experiences in forming the vital relationships with local partners in the Asian countries.
One of the biggest polluters in the energyhungry economies of Asia is air pollution resulting from coal fired power plants. Aloe invested in a company based in Germany which produced NoX catalysts for power plants that had been successfully used for over two decades by European power producers. After Aloe's investment, the company successfully signed a partnership with Dongfang Boilers in China to transfer the technology know-how and a manufacturing plant has now been built in Chengdu to supply China and the surrounding areas.
Another sector we are passionate about is recycling. Not only does it make sound financial sense, it is also an important mechanism of counterbalancing the consumerism of today. One of Aloe's portfolio companies based in France has just completed a partnership with a Singaporean company to construct a battery recycling plant. It is also in talks with a number of other companies in Asia to roll out various other recycling technologies including fly-ash recycling, cathode ray tube recycling and steel dust recycling. Had Aloe not invested and worked with the company to build the relationships in Asia, the company would definitely not have made the transition to Asia so quickly.
The fundamental to any good investment is the team. We apply the same principals to our own firm and we are always on the lookout for strong entrepreneurial team members who can bring their experiences to the benefit of our portfolio companies. Our investment strategy is working and we have a strong pipeline of deals.We look forward to making new investments once the fund has been successfully raised.
Vivek Tandon, Aloe Private Equity, London
Vivek Tandon is the founder and a general partner of Aloe Private Equity, an investment firm based in London and Paris. Aloe expects to close Aloe Environment Fund II, its second clean energy and environmental fund dedicated to the clean energy and environment sector, in the third quarter of 2007 with a target of up to $200 million. The fund has attracted the support of the International Finance Corporation and many of the investors in the first fund. Aloe's strategy is to invest in European cleantech companies and help them expand into Asia.
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