Climate Change Capital has become the latest private equity manager to raise a fund targeting sustainable property investments. The fundraising comes as firms in the niche market respond to the growing awareness of environmental issues.


Climate Change Capital, a UK environment-focused investment manager with private equity investments, has raised £69m (€79m) for a commercial property fund aimed at refitting buildings to improve sustainability.

The fund began raising in August 2008 and failed to meet its £150m target owing to a difficult market. It finished raising with six investors, including three investors from CCC’s existing funds. The investors came from the UK, Ireland, Holland and Australia.

Climate Change Capital has already invested 40% of its fund and has bought a property each in Birmingham and Edinburgh.

The sustainable property market remains a relatively new and niche sector for private equity funds with only 13 such vehicles in existence, including the CCC fund, according to data provider Preqin.

Preqin said it knew of no sustainable property private equity funds to have finished fundraising before 2009, the year in which six funds raised an aggregate $900m (€657m).

Preqin said green private equity property funds had begun to grow more popular but did not predict how much the market would increase in the near future.

Tim Mockett, a managing director at Climate Change Capital, said: “Investors are becoming increasingly aware of how the future regulatory landscape will look and are acting accordingly. The trend to more energy efficient buildings, driven by legislation and the wishes of occupiers and investors, is irreversible.”

Esme Lowe, a managing director at CCC, added: “With any slightly new area, it takes a while for people to really understand and gauge what works for investors, what’s attractive in the market, and what the strengths and weaknesses of the offer are. Our investors have recognised this, but a number of people who had looked at raising green funds in the last two or three years have not succeeded. There is no fundamental flaw in the private equity model, it is more a function of specific structuring issues that some other potential funds had – and of what has been for everyone a uniquely challenging equity raising market”.

Preqin said that Jonathan Rose Companies, a US property services and investment firm, launched the first sustainable private equity property fund in 2006, with a vehicle called Rose Smart Growth Investment Fund I. The fund finished raising in September last year with $40m.

In November, Bridges Ventures, a socially-driven private equity firm chaired by former Apax Partners chairman Ronald Cohen, had raised at least half its first property fund in a move to broaden its investment base from venture capital.

The firm had raised £26m and said it hoped to raise at least two or three times that over the next year.

Meanwhile, six sustainable property funds remain in the fundraising market, seeking a combined total of $500m. The property fund of investment bank Credit Suisse has targeted the largest amount with a desired aim of CHF300m (€205m) for its Green Real Estate Fund.

Separately, private equity firm KKR hired Elizabeth Seeger from the Environment Defense Fund to expand its nascent green portfolio programme. The programme, according to KKR, is a set of metrics and analytical tools that portfolio companies can use to improve "in several key environmental performance areas, including greenhouse gas emissions, waste, water, forest resources and priority chemicals".

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