Is this surprising? Probably not.
Green is such a buzzword these days that I’ve heard a number of people express fears of a backlash. I’m not talking about venture investing, I’m talking about plain, vanilla M&A, where there hasn’t been much of a surge of interest to backlash against! By and large, green M&A is still waiting for its day.
A feature from mergermarket reports that the “groundswell of interest” in environmentally friendly building materials and processes has been slow to translate to M&A activity.
Obstacles to M&A could include the generally difficult construction market, a skepticism about the profitability of green products and the difficulty in defining what really counts as green.
Aside from the first one, those obstacles apply to most green buyout targets. So how does PE activity fare?
I don’t count TXU as a green buyout, so that aside, I’d say PE activity in green companies is slow to move.
Private equity firms are more likely to follow KKR in its adoption of green practices—the firm enlisted the Environmental Defense Fund to help its portfolio companies with energy efficiency. That’s a move that is sure to help it make money. But they’re not buying green companies.
There’s Denham Capital, a PE firm focused on energy efficiency businesses, there’s Environmental Capital Patrners, and there’s Hudson Clean Energy Partners, a firm focused on renewables. The latter two have yet to make an investment. Beyond that, the greenest LBO shop may as well be Leonard Green. (Ha.)
PS. Things look a little more hopeful in the strategic area. That fact is of no interest to peHUB readers, until you realize that companies like BPL Global are gearing up to recruit away your green investment experts.