Turquoise International, a merchant bank focusing on energy efficiency and the environment, will manage a Low Carbon Innovation Fund 2 following their success with the first fund.
LCLF 2, like the first Low Carbon Innovation Fund will provide venture capital along with private sector investors to small and medium-sized companies developing low-carbon technology in the east of England. The private sector investors can include company founders, business angels, high net-worth individuals, trade investors or other funds willing to provide finance for early and growth stage businesses.
“Turquoise was selected to manage the original LCIF initiative and was privileged to see some world-class clean technologies being developed by investee companies,” Ali Naini, managing director of Turquoise International, said in a statement on August 14. “We are committed to continuing to support new, ground-breaking technologies through LCIF2.”
Turquoise International deals in commercial loans and investment, but their focus on energy and the environment makes them unusual among financial services organizations. Founded in 2002, Turquoise offers capital raising, M&A and investment management services.
The London-based company helps investors with everything from discretionary fund management to advice on individual investments. The merchant bank has also invested its own funds in a wide range of firms, including geothermal experts GT Energy and Connected Energy, an energy storage company that among other things is developing ways to reuse batteries.
LCLF2 will invest $13.2 million (£10.9 million) raised by the European Regional Development Fund along with at least $13.4 million (£11 million ) from a private sector co-investment. LCLF 1 opened in 2010 as a$85 million co-investment project.
Turquoise is currently working on the exit phase of the first fund, and the proceeds will feed into new investments.
The University of East Anglia in Norwich, England, operates the first fund alone and the second in cooperation with the Norfolk County Council. The funds invest in companies that help reduce carbon in the atmosphere, either through the products and services that they sell or through their own operations. The fund also provides guidance on how to maximize potential carbon savings through an assessment and due diligence process.
The first fund invested in a wide variety of companies, including Sustainable Marine Energy, which is bringing a tidal power technology to market. The platform reduces the costs and risks of deploying and operating tidal turbines that generate low carbon electricity by capturing the kinetic energy of flowing water. Controlled Power Technologies has products that help car makers meet tightening carbon-emission standards and consumer demand for fuel efficiency. GapoGroup Ltd. is a start-up producing Gapotape, an innovative insulation product that helps homeowners save energy and reduce their carbon footprint.
In 2016, LCIF commissioned consultants, NAREC Distributed Energy to calculate the carbon savings resulting from their portfolio companies. The carbon savings to October 2016 totaled over 250,000 tons of CO2, and they forecast that those same companies would save over 10 million tons of CO2 by the end of 2020.
Karma’s Takeaway: Merchant banks and renewable energy don’t always go together, but Turquoise is finding that advising and investing in the sector can be a lucrative niche.