Dutch pension giant ABP Investments will allocate 2% of its EUR215 billion (RMB2.3 trillion) portfolio to “an asset class we call innovation” by 2009, according to ABP Investments Asia chief operating officer and chief financial officer Micheal Friedlander, speaking to a US Clean Energy delegation visiting Hong Kong January 12.
Friedlander said ABP’s size, strength and depth – it is the third largest pension fund in the world – offered it opportunities to tap more illiquid, longer term investment opportunities such as cleantech which traditional investors may shy from.
With reference to an earlier presentation by the Hong Kong Productivity Council describing 50 year paybacks from solar installations, Friedlander said “we may well clear our throats at 50 years. But 15, 20 years would not bother us at all. We believe in these long term investments. We’ll see an increasing duration, from our eight, nine, 10 range into the 17-20 year range. These opportunities play very well for a company like ABP,” he said.
Funds will be diverted from equity portfolios into real assets and private clean tech markets over the next year said Friedlander, with an aim of EUR5 billion invested by 2009.
The company has drawn up a check list based on the “Environment, Social and Governance (ESG)” concept, which asks investees how they contribute to environmental factors on a local and global scale. ABP has also established an innovation committee, which has members globally, including Hong Kong. The committee will draw together proposals and opportunities which meet ESG criteria.
Friedlander said the company would aggressively pursue opportunities it liked. “We could deploy EUR5 billion in six weeks if we needed to,” he said. “We’ve cut through the red tape inherent in organisations such as ours.”
ABP is not alone is seeking non-equity market cleantech investments.
“Clean-tech” is the new Silicon Valley buzzword, according to Asian Venture Capital Journal managing editor Paul Mackintosh. “It’s the third largest venture capital category in the world,” he said. “VCs tell me this may be the biggest job and wealth creation opportunity of the 21st century.”
According to Mackintosh, the clean technology sector takes 10% of total venture capital deployed, after the largest sector (IT) with 60% and communications with 11%. Biotech accounted for 5%, not far behind the traditional industrial business with 7%.
ABP’s Friedlander said he saw thousands of opportunities where companies can deploy new clean technologies. “Now there are bucket loads, truck loads of capital… tied together with [financing schemes such as] P2E2, I hope this will be the spark that’s needed to ignite the avalanche of new projects across the globe.”