Institutional investors have committed USD382m in the second stage of asset-raising for the China Methane Recovery Fund, a pioneering fund sponsored by Man Investments that invests in tech
Institutional investors have committed USD382m in the second stage of asset-raising for the China Methane Recovery Fund, a pioneering fund sponsored by Man Investments that invests in technology to extract methane gas from coal mines in China for use in generating electricity.
According to Man Investments, the fund can benefit the environment while earning returns for investors from sales of electricity and carbon credits. Methane gas is a potent greenhouse gas that is released normally as a result of mining. The investment projects are organised with Chinese partners under the Kyoto Protocol, which encourages investment to cut greenhouse gas emissions in developing countries.
MTM Capital Partners, an asset management business specialising in environmental projects in which Man Investments has a majority stake, will manage the fund. The final stage of asset-raising for the fund will close before the end of the year, with a maximum of a further USD164m sought from institutional investors.
The China Methane Recovery Fund, the first in a range of new environmentally-related investment funds that Man intends to take to market, represents an exciting mix of environmental, social and commercial considerations, according to Nick Wood, chief executive of the group developing environmental strategies and products at Man Investments in London.
‘We are backing this fund because MTM’s strategy shows very good return potential,’ Wood says. ‘But equally important is its capacity to significantly benefit the environment by reducing harmful greenhouse gas emissions, and to contribute to China’s economic growth through installing much-needed additional electricity generating capacity.’
According to Wood, MTM’s long experience in China gives it an edge both in sourcing investment opportunities and operating in partnership with Chinese companies. In developing projects in China, MTM has access to leading technology and technical support, and is now active in the country implementing these projects.
MTM was founded in 1989 as an independent investment bank with special interest in China. ED&F Man, the predecessor of Man Group, bought a minority stake in 1990 and sold out in 1999. MTM Capital Partners, the fund management arm, was founded in 2003 when MTM saw a big opportunity in methane capture projects in China. Rikky Hassan and Geoffrey Isaac are co-founders and key principals of the business, which employs eight people in London and four in Beijing.
MTM seeks to originate, own, and control the supply of certified emissions reductions, a type of carbon credit, by investing directly in underlying projects. Its first fund operates as a project originator and developer of methane capture projects, specialising in coal mine methane and peripheral investments in landfill gas projects. Initially the fund will concentrate on Shanxi province, which holds 30 per cent of China’s coal reserves and has high quality infrastructure.
Man Investments is one of the world’s largest hedge fund providers, with USD67bn under management at the end of June, and has investment centres in London and Pfäffikon in Switzerland as well as offices in Chicago, Hong Kong, Dubai, Montevideo, Nassau, New York, Singapore, Sydney, Tokyo and Toronto. Established in 1783, the Man Group has evolved from a global commodities trader to a financial services employing about 1,500 people in 13 countries.