| FRANKFURT, June 27
FRANKFURT, June 27 Any German politicians hoping
private equity investors will cough up some of the billions
needed to finance the shift to green energy should probably
think again, if comments at an industry conference on Wednesday
are anything to go by.
Speakers at the conference said renewable energy projects,
vital if Germany is to achieve its goal of a sustainable shift
away from nuclear power, were too bound by red tape to be an
attractive destination for the huge sums which private equity
"If something is heavily subsidised and regulated, we keep
our hands off of it," Ralf Huep, a manager at UK-based private
equity fund Advent International, told the Private Equity 2012
conference organised by Handelsblatt newspaper.
Investment opportunities in general for private equity in
Germany are bleak and unlikely to improve for at least 12 to 18
months, as the euro debt crisis rumbles on, Huep said. "The
market has dried up. We are only seeing 15 to 20 percent of what
we did in the good years."
Yet this is not making renewable energy investment more
Like Advent, private equity firm 3i, which focuses
on medium-sized transactions, also sees renewable risks as too
"This is not a field where 3i will be romping around," said
3i's Germany head Ulf von Haacke. "It is an area where political
opinions can change too quickly".
In the wake of the Fukushima nuclear disaster, Germany
decided to phase out nuclear power completely by 2022, faster
than originally planned. The reactors had provided 23 percent of
its power supply in 2010.
FINANCING THE TRANSITION
In addition, Germany wants 35 percent of its electricity to
come from renewable resources by 2020, compared with 20 percent
Questions remain over how to finance the transition, which
HypoVereinsbank (HVB), a unit of Italy's UniCredit,
has estimated will cost 335 billion euros ($418 billion).
Germany's public sector development bank KfW is
expected to play a large role.
Insurance players like Allianz and Munich Re
are keen to find long-term investments that can
provide them predictable income similar to bonds, but these big
investors also face uncertainties, particularly in offshore wind
Munich Re aims to plough 2.5 billion euros into renewable
energy and 1.5 billion into infrastructure projects in the
Private equity investors have tended to shun regulated
market segments, where they feel they pack less of a punch, but
still see opportunities among suppliers.
"We would rather invest in turbine makers, which in my view
could also be for the wind industry," von Haacke said.
Max Roemer, founding partner at small player Quadriga
Capital, echoed that view. "We are not so keen to go into
renewable energy," he said, adding that transmission and cooling
systems were of more interest.
"We prefer companies that are making this type of equipment,
which is needed both for renewable and traditional energies,"