Investec’s Templewater Eyes Second Close for Decarbonisation Fund

21 March 2024, Hong Kong
Impact Investing

(21 March 2024, Hong Kong) Templewater, a Hong Kong-based private equity firm, wants to raise USD 150m by the second half of this year for the next close of its inaugural decarbonisation fund, a senior official told sister publication Infralogic.

The manager, a spin-off from Investec’s Asia Principal Investments Division, held a first close last December from nearly 10 limited partners (LPs) for the vehicle, said Alfred Wong, Impact Investing Partner. He declined to disclose the amount raised at the initial closing.

The overall fund target is USD 300m, which it expects to hit in a series of rolling closes before the end of 2025.

Templewater’s decarbonisation fund drew China-based LNG equipment provider CIMC Enric Holdings and Canada’s fuel cell developer Ballard Power Systems as anchor LPs at the first close, said Wong. It aims to attract corporates, financial institutions, governments, and family offices and may engage placement agents for the remainder of the fundraising.

The investment firm focuses on decarbonisation technologies across three themes: hydrogen, energy storage, and carbon capture, utilisation, and storage (CCUS).

Companies with proven technologies that are relevant to Asian markets and have potential synergies with Templewater’s existing portfolio will be prioritised. Target valuations will range from USD 200m to USD 700m, said Wong.

The fund anticipates making 10-15 investments of between USD 5m and USD 20m each. It will typically invest minority equity in Series B rounds and onwards.

Templewater aims to make three to four decarbonisation investments per year and plans to announce its next deployment in a renewables-focused electrolyser company by April, he said.

The decarbonisation fund has already made two investments: Universal Hydrogen, a California-based aviation hydrogen logistics provider, and Wisdom Motor, a Chinese zero-emission vehicles maker.

The Article 8 vehicle has a 10-year lifespan with a five-year investment period. It aims to deliver a 25% gross IRR and a 3x multiple on invested capital, according to Wong.

Article 8 funds, or "light green" funds, are those that "promote environmental or social characteristics" according to the European Union's Sustainable Finance Disclosure Regulations.

Bus fleet decarbonisation

“We aim to do more than just invest capital; we strive to boost our investees' growth by generating demand for their technologies through our existing portfolio companies,” said Wong.

Templewater, which also operates private equity and real estate strategies, counts Hong Kong bus operator Bravo Transport Services among its portfolio companies. Bravo Transport owns and operates over 1,700 buses covering 210-plus routes in Hong Kong under two brands: Citybus and New World First Bus Services.

Templewater acquired Bravo from infrastructure conglomerate, NWS Holdings, in 2020.

“Bravo has committed to decarbonising its fleet by 2045 via hydrogen and electric battery technologies,” said Wong. The company is working with the government on the most commercially-feasible decarbonisation route and is planning its second commercial refueling bus station in the city by the end of 2024.

Templewater was founded in 2018 by Investec Group and Cliff Zhang, a former executive at Chow Tai Fook Enterprise, the private investment arm of Hong Kong's billionaire Cheng Family.

by Jessica Wong in Hong Kong

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