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Green tech: Good for the planet and your portfolio

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Filed under: Energy, Technology, Economy, Investing

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We've all heard about the promise of green technology in regards to carbon emissions, the ozone layer and polar bears up on the ice cap. But, it could also save your portfolio. Recent private investment activity in this sector stands out in a depressed marketplace, suggesting that there is considerable upside potential for early investors, not to mention a future for the sector that will later be available to the public.

Four new clean technology deals were recently announced signaling that early stage private investment trend is gaining steam. Some transactions bring new participants to the table, while others reflect the commitment of repeat investments. Investment in clean technologies is robust -- a rare breed in today's market -- and the amounts are far from trivial. Further, they span all stages, from angel financing through private investment in public equity.

Superconductor Technologies (SCON), based in Santa Barbara, Calif., secured an equity investment of $11.26 million from several institutional investors. Of the net proceeds, $10.58 million will be used for general working capital purposes. STI operates in the commercial wireless and electrical grid spaces, providing interference elimination solutions.

Energy Developments picked up AU$280 million (US$224 million) from a group of private equity investors led by Australian firm Archer Capital. Archer already holds 19.9 percent of Energy Developments and has a total of AU$2 billion (US$1.6 billion) in assets under management. The investors purchased landfill gas assets from Energy, which has an international portfolio of power facilities in Australia, the United States, the United Kingdom and Europe from a variety of sources, including landfill gas, coal mine methane, natural gas and liquified natural gas.

Following nine months of collaboration, Genesis Invest has acquired a 51 percent stake in green product distribution company Green Eco Sys. Genesis invests in and provides alternative ecological products with a particular focus on the development and use of renewable energy sources. With its investment in the Miami, Florida-based Green Eco Sys, Genesis gains long-term access to the U.S. market for a wide range of eco-friendly products.

Frog Capital, a London-based cleantech investor, has doubled down on SiC Processing, a German recycling company. Rather than invest directly in SiC, Frog purchased shares from other investors. This wasn't a favor to early-round players desperate for the exits. Rather, the target -- which raised €53 million in 2007 with Merrill Lynch and Zouk Ventures leading the charge -- is on track to generate €100 million this year. SiC is in the business of recycling and supplying wafer-cutting fluids for use in the production of silicon wafers for solar panels and semiconductors.

For Frog, it's a natural fit, as its portfolio consists of businesses in sectors of the sustainability space that are growing rapidly. The fund invests in companies that work in industrial waste recycling, water treatment, energy-efficient technology and other green technologies.

It's not just the established companies that are receiving infusions. EcoDog, which provides home energy efficiency and monitoring systems, just received angel financing, which could lead to a total first round investment of $5.6 million. The company is ready to launch a pilot program after completing its product beta testing in 2008.

And, this is just the activity announced today. The clean technologies space has been evolving rapidly (from an investment perspective), with a full deal pipeline emerging. After years of hype, the green market is becoming a reality, and investors are putting some skin in the game in an environment where investable assets are tight. The future of the planet may be green . . . it looks like this may be the case for your portfolio, too.

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