ESB left nursing €42m loss on green technology investments
The ESB has notched up over €42m in losses to date on green technology investments made through a €200m fund it set up in 2009, analysis by the Sunday Independent has found.
Novus Modus, which is managed by a sole advisor, Greencoat Capital, has to date invested about €150m of the fund, with 35pc of the venture capital (VC) money backing Irish companies. Some 44pc of the fund has backed emerging technologies in the UK. A sizeable chunk of the fund, €8.9m, was also put into a US VC fund of Vantage Point Venture Partners, which has backed the likes of electric car maker Tesla, but delivered varying annual returns, some as low as 1.9pc, since 2009.
In 2013, the chief investment officer of the largest pension fund in the US, Calpers, which has over €800m invested in green technologies, called such investments "a noble way to lose money," having notched up losses of 9.7pc every year between 2007 and 2013.
A sizeable amount of the ESB's money backed wind energy businesses, in which it already has a large interest. In 2011, it sunk €20m into Limerick firm Wind Energy Direct, while an undisclosed amount, believed to be over €5m, was invested in Airvolution Energy in the UK, which develops wind farms in locations such as industrial estates and brownfield sites.
Losses Novus Modus has booked to date include a €7.8m write-down on an investment in Geothermal International, a UK designer and installer of heat pumps. It lost another estimated €3m after investing in a Dublin firm Intune Networks, a broadband fibre company which was backed by Dermot Desmond and telecoms entrepreneur Barry Maloney, but subsequently went into receivership.
Other companies it has backed include a UK next generation radar firm Aveillant, Glasgow-based Heliex Power, which converts steam wasted in industrial processes to electricity, US solar power firm TenKSolar, Cork retail LED lighting firm Nualight and two Irish energy management technology firms Cylon Controls and Endeco Technologies.
The remainder of the Novus Modus fund will be invested within the next 18 months, the ESB said, some of it possibly in follow-on investments in these companies.
"Cleantech investing is high risk, but ultimately the return on successful investments should outweigh the losses on those that are unsuccessful," the ESB said. It added that Novus Modus expects to exit its investments within the next five years and that the fund is performing above average for its sector.
Sunday Indo Business