Natixis to launch new EUR500m carbon fund
Natixis Environnement & Infrastructures has announced plans to launch a new carbon fund, the European Kyoto Fund, with a target size of EUR500m, in response to growing interest from investors in alternative and uncorrelated carbon-related assets.
The new fund aims to build on the success of the European Carbon Fund, a Luxembourg Sicav fund launched in 2005 by co-sponsors Caisse des Dépôts and Fortis with investments from 13 banks, insurance companies and pension funds.
The European Kyoto Fund will be managed by the Natixis E&I carbon team with the support of the Natixis international network. The fund will be structured under the Luxemburg 2007 specialised investment fund law as a regulated vehicle in order to offer transparency to investors.
The fund aims to take advantage of the tremendous development of the carbon markets by following the path pioneered by the European Carbon Fund while engaging in more elaborate strategies.
It will invest in all types of carbon assets, including post-2012 emission reductions, in line with the long-term emission reduction targets announced by the European Union to meet its commitments under the Kyoto Protocol and beyond.
The European Kyoto Fund will be opened for subscription from October. Natixis will be the first sponsor with EUR50m committed.
As investment manager of the European Carbon Fund, Natixis E&I recently received an award for the Carbon Finance Transaction of the Year award from Environmental Finance Magazine for a large coal mine transaction in China under the clean development mechanism of the Kyoto Protocol.
The underlying projects will reduce emissions of carbon dioxide by 17.8 million tonnes between 2007 and 2012 as a result of investment by Chinese group Yangquan Coal Industry. The investments concern the use of coal mine methane for power generation and alumina production projects in the province of Shanxi. The projects will also improve safety in the mines.
Natixis E&I arranged a consortium of financial institutions including the European Carbon Fund, Fortis, Lehman Brothers, BNP Paribas and Orbeo (SocGen/Rhodia) to purchase the carbon emission reductions from Yangquan Coal. The transaction is the largest to date under the clean development mechanism, apart from industrial gases projects.
The deal is one of 21 transactions carried out by the European Carbon Fund, which is now fully subscribed. The fund has financed and arranged the reduction of more than 40 million tonnes of carbon dioxide from sustainable development projects of various technologies including renewable energy, energy efficiency and methane recovery in Latin America, North Africa, Eastern Europe and Asia.
Natixis Environnement & Infrastructures is a wholly owned subsidiary of Natixis specialising in project finance that manages several investment funds in the environment with total assets of nearly EUR400m, and is in charge of the European Carbon Fund's investments and divestments.
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