Guinness Asset Management Ltd. plans to start its third fund to invest in renewable power and energy efficiency in July, targeting 10 million pounds ($16 million).
The investor is raising the same amount for its second fund which is set to close by the end of the month, Shane Gallwey, a fund manager, said in an e-mail. It plans to start a follow-on fund in July that will close on Dec. 31.
Guinness’s funds operate under the enterprise investment program, a U.K. government-backed system offering tax breaks to investors in “higher-risk” companies. It plans to support three to four businesses with its third fund.
For its second fund, Guinness is talking to developers of anaerobic digestion plants, said Gallwey. Anaerobic digestion breaks down organic material, such as food waste, in the absence of oxygen to produce a biogas that can be used to generate power. It’s also in discussions with solar-power companies and energy-efficiency businesses.
The U.K. is aiming for 15 percent of its energy to come from renewable sources such as wind, solar, hydropower and biomass by 2020. At present, about 3.3 percent of the country’s energy comes from clean sources.
“We have partnered with two large energy service companies to assist their clients with installing energy-efficiency equipment to reduce their heat and electricity costs,” said Gallwey. “There is a very extensive pipeline of projects from these sources and we will look to make investments into at least two investee companies focused on these opportunities.”
Guinness’s third fund will focus on similar industries and companies to the second, said Gallwey. It only invests in businesses that use proven technology with an established operating history, he said, and it looks for returns of 10 percent to 15 percent.