Wilbur Ross Targets China's Clean Energy Opportunities

   By Keenan Skelly 
   Of DOW JONES PRIVATE EQUITY ANALYST 
 

Wilbur Ross has made plenty of money investing in the U.S. coal industry, and is taking that success overseas to China, but with a focus on cleaner energy resources.

His firm, WL Ross & Co., is raising WLR China Energy Infrastructure Fund, which has a $750 million target and will invest in clean energy opportunities in China, including clean coal technology and wind farms, according to two prospective investors.

The fund will invest in existing infrastructure assets as well as new, or "greenfield," opportunities.

A spokesman for Invesco Ltd. (IVZ), the parent company of WL Ross, declined to comment.

As part of the initiative, WL Ross is partnering with the Huaneng Group, the country's largest power producer by capacity. Huaneng has an existing private equity relationship with Invesco, a joint venture to invest in China's power generation sector.

"If you want to invest in China, you have to have a local partner, so that is huge," said a prospective investor.

WLR China Energy Infrastructure Fund hasn't been immune to the difficult private equity fund-raising environment. The fund delayed a first close earlier this year, and though it is expected to hold it this month, the amount is expected to be less than $100 million, this investor said.

The fund also is seen as riskier and more focused than typical energy or infrastructure funds.

"It's not clear yet that Chinese government wants to work with public-private partnerships just yet," said a second prospective investor. "Also, he [Wilbur Ross] has a track record in coal but that's not clean energy. They will invest in clean coal technology, but your average environmentalist might see that as an oxymoron."

Still, WL Ross is likely banking that many investors will find this fund attractive. California Public Employees' Retirement System is conducting due diligence on the fund, said a person close to the matter.

"The Chinese government wants to invest [over $100 million] each year in clean energy from now until 2050 and they want to help promote foreign investment to validate their growth initiative," said an infrastructure investor. "China can also guarantee 7% GDP growth each year."

(Dow Jones Private Equity Analyst covers fund-raising and other news of interest to the private equity community.)

- By Keenan Skelly, Private Equity Analyst; [e-mail]