January 29, 2010, 9:47 am

Private Equity Is Bullish on Clean Energy

With strong interest from corporations eyeing the clean energy sector, 2010 could turn out to be a good time for private equity and venture capital firms to pursue investments.

“One of the most exciting things about the space now – this applies all the way down the bottom to the early-stage technology firms – is that there is a tremendous amount of strategic interest in this space,” said Hovey Kemp, a private equity lawyer at the law firm Goodwin Procter, said at the Dow Jones Private Equity Analyst Outlook 2010 meeting in New York earlier this week.

He added that one could easily put together a long list of “very large corporations” that are paying “very close attention” to the sector, among them networking equipment maker Cisco and electronics manufacturer Samsung.

“There are buyers out there that are going to emerge here,” he said.

For private equity and venture capital firms, which collectively invested $6 billion into the clean energy sector in 2009, according to the consulting firm Bloomberg New Energy Finance, this could translate to a variety of selling opportunities as a way of exiting their investments.

Investors at the event also saw good reasons to be buyers in the sector. Chris Hearn of the private equity firm First Reserve Corporation said long-term electricity needs in the United States would continue to rise, thanks in part to greater use of electric vehicles.

Tucker Twitmyer of the clean-energy private equity firm EnerTech Capital, pointed to smart gird technology as an area where investors can get a quick return on their capital.

It may take a few years for private equity and venture capital firms to figure it out, Mr. Hovey said, but the clean energy sector could become “the mother of all verticals” for private investors.