Amid the sublime subprime gloom and doom in mortgages and the systemic failures threatening the credit markets, green energy investments may be a the lone bright spot for Wall Street firms.
Goldman Sachs (GS - Get Report) and Credit Suisse (CS - Get Report) appear to believe so. The two firms could look to plow hundreds of millions into newly-launched, renewable energy private equity fund Hudson Capital Management.
Kicked off by Goldman alum Neal Auerbach late last year, the Teaneck, N.J.-based fund could look to raise as much as $2.5 billion. It will target late-stage, environmentally-friendly energy generation projects such as wind farms, solar panels and biomass and biofuel projects in the U.S., as well as Latin America, Europe and Asia. Its initial investments will be made via limited partnership vehicle Hudson Clean Energy Partners.
On Thursday, Credit Suisse announced that it would look to invest about $300 million into Hudson.As a part of Hudson Capital's initiative, Auerbach also has recruited energy banking honcho John Cavalier to come in as a partner from Credit Suisse in New York, where he is currently vice chairman, corporate and investment banking and chairman of the firm's global energy group. Officials at Hudson Capital and Credit Suisse did not return calls for comment. Goldman's precise involvement at this point could not be determined, but many partners of the firm have individually invested capital in the Hudson venture. A spokesman at Goldman declined to comment. High-profile investment banks such as Citigroup (C - Get Report), Merrill Lynch (MER) and Morgan Stanley (MS - Get Report) have been pouring prodigious sums, by way of principal investments of their capital, into green energy over the past year and a half. Driving the big energy push for some of the larger institutions is the increasing prices of commodities such as oil and natural gas. Contracts for crude oil hit a record $100.09 a barrel on Jan. 3 and have continued to climb since with prices for May delivery at $106.47 a barrel, according to Bloomberg. High prices of coal-fired generation plants and their lack of appeal among environmentalists, as well as the high costs of nuclear projects, are serving as major drivers for green, clean energy. Moreover, the U.S. and other nations over the past few years have been promoting energy independence and offering more economic incentives to invest in so-called green projects and clean technology efforts. Industry group New Energy Finance reports that clean tech investments tripled between 2002 and 2006 to about $63 billion and that number over the course of the next few years is expected to ratchet up, observers say. Credit Suisse's Cavalier also has said publicly that he expects green energy companies to tap the public markets in greater numbers, noting that the market value of the world's publicly-listed solar companies stood at about $1 billion in 2004 and is more than $71 billion presently, with pending regulation that could further fire up fresh offerings from green companies aiming to grow. Cavalier has coordinated some big energy initial public offerings, including the IPO of Chinese solar firms SunPower (SPWR - Get Report) and Suntech Holdings (STP). Last summer, he helped lead the IPO of Boston-based EnerNOC (ENOC - Get Report).