CVC Sustainable Investments: Funding For Cleantech
CVC Sustainable Investments (CVCSI) began life in 2002 as The Eco Fund. At that time there were only limited opportunities available to investors wanting exposure to companies that benefit the environment and society. “The investment products on offer in the sector were managed ethical funds holding investments in stock exchanged listed companies only,” says CVC Investment Analyst Jo Hume. “In contrast, CVCSI offers investors access to promising companies prior to their listing stage.”
Sustainable investment pioneers
CVCSI is a company with a shareholder structure, but is purely an investment vehicle. It therefore has no employees, and is managed by CVC Managers Pty Ltd.
“The founders at CVC were proud of their pioneering approach,” says Jo. “They were confident that investors would share in this pride and provide expansion funding and support to innovative Australian companies with world class environmental technologies.” The belief was that the environmental sector could offer outstanding opportunities for investment in growing companies capable of meeting CVCSI’s return requirements.
Despite the promises the sector represents, it hasn’t all been a smooth ride. The GFC can probably take some of the blame, and the uptake of clean technology has been slower than expected. “There was more enthusiasm for sustainable investments between 2002 and 2007 than there is now,” Jo notes. Undaunted, CVCSI continues to seek sustainable investment opportunities. “We receive and carefully review unsolicited proposals and pro-actively pursue opportunities in targeted sectors.”
A sign of the weakness in the cleantech investment sector is that CVCSI is not currently growing. “The number of unsolicited proposals we receive has reduced from pre-2008 levels, down to about two per month” says Jo. “To date we have invested in less than two per cent of the unsolicited proposals received.”
Still, there are investors who wish to support sustainable businesses as they reap a return on their investment. Contributions to CVCSI range from the minimum $10,000 up to a few hundred thousand dollars from investors, both individuals and some institutions, that Jo describes as “high conviction”. And why not? With the need to lighten our environmental footprint growing ever more pressing, it remains reasonable to conclude that the fruits of clean technology will be in increasing demand.
Jo has previously shared her thoughts on what a sustainably-focused business needs to do to be attractive to external investors – quality management, disruptive technology and modest capital expenditure requirements amongst them. “Businesses that can profitably deliver sustainable products or services over the long term without heavy dependence on government policy are very appealing,” says Jo. “They are likely to be less risky than businesses that have an environmentally negative impact, and are therefore more interesting from an investment perspective.” Still, investors remain motivated by returns that need to be similar to or better than mainstream investments for sustainable investments to have appeal.
As for the CVC team itself, their motives are more than just financial. They have a strong interest in sustainability that extends into the day to day operations of CVC.
“We are mindful of the environmental impact of our operations,” says Jo, “but we are a small office with a relatively light footprint. Our greatest contribution to global sustainability comes from the investment choices we make.”