A Carbon International survey of British and Continental European environmental/cleantech venture capital and private equity investors has found that 65 per cent consider an IPO in 2010 or 2011 to be a feasible exit for at least one of their investments. 

However, although almost 90 per cent of those surveyed expect to see a significant increase in listings within the next 18 months, due to the severe lack of IPO activity over the past 18 months, 87 per cent see the trade sale as a more likely exit in today’s market.
 
Encouragingly, 87 per cent of respondents reported that their environmental investments are either outperforming, or performing as well as, the general market. Despite this, the survey found a strong reluctance from investors to invest in early stage or capital intensive companies such as wave and tidal - investors instead choosing to focus on their existing portfolios during the recession.
 
Due to the lack of funding available to early stage companies today, some investors foresee a “development hiatus” or shortage of investable companies in 2012/2013.
Other perceived risks to the environmental sector range from lack of political momentum, lack of capital, low oil prices and “muppets who don’t know what they’re doing”.
 
The increasing cost of energy is seen as the most important driver for investment decisions, followed by national legislation, then international policy.
 
Energy efficiency and resource recovery are seen as the most attractive sub-sectors for future investment.  Biofuels and fuel cells are seen as the least attractive sub-sectors.
 
Tom Whitehouse, Carbon International chief executive, says: "Our survey reveals some positives: the environmental sector is performing well and there is a strong expectation that the IPO markets will re-open. But the survey also raises concerns. The majority of investors fear that early stage sectors, particularly capital-intensive ones such as wave and tidal power, energy storage and bio-sequestration, will fail to secure sufficient funding to grow from either private or public markets. If so, it’s difficult to see renewable energy targets being met."
 
The survey results will be distributed at the Environmental Opportunities Forum at the London Stock Exchange on 25-26 March. The forum, which is organised by Carbon International, will provide advice to private companies on how they can raise money privately and/or through an IPO. It will also showcase private and quoted investment opportunities to an audience of institutional investors.