Consensus comes to market

Property investment house Consensus Business Group has announced a major push into the environmental sector. And, with billions in assets, it promises to make quite a splash. Mark Nicholls reports

A reception, held in late July in London’s exclusive Mayfair district, marked the coming-out of what could potentially become a major force in environmental investment. The event – held at the house of property magnate Vincent Tchenguiz – unveiled the Consensus Environmental Group, an arm of the £5 billion ($9.45 billion) property investment firm Consensus Business Group.

“We are here to announce exciting work we are doing in the environmental space,” Tchenguiz, Consensus’ chairman, told the assembled investors, entrepreneurs and lobbyists. “We are expending large quantities of Consensus Group revenues and resources in the establishment of a potentially unique environmental business model.”

Tchenguiz referred obliquely to transactions due to be announced in the coming weeks and months, but the centrepiece of the reception was modest: the announcement of a $2 million investment in Envirotrade, a UK-based social-forestry company, which sells carbon offsets from projects in Africa.

But Tchenguiz was followed by Wayne Keast, CEO of environment at Consensus,who claimed that,“this year alone, we have invested and committed over £100 million in environmental technologies, and we continue to be one of the most active investors in the sector.”

Vincent Tchenguix, Consensus: an eye on the environment

He cited investments in renewable energy technologies and projects, cleantech businesses and funds, water purification and desalination technologies, and land remediation companies. Tchenguiz also mentioned biofuels, waste-to-energy, and “products linking the financial markets to the business of carbon dioxide emission reduction”, in addition to forestry.

The company is active “at all stages of development, from university intellectual property and early-stage technologies [to] expansion capital and financing environmental infrastructure projects,” Keast stressed.

Consensus has already taken a number of stakes in environmental companies and funds, including renewable energy companies such as Ocean Power Delivery, German fuel cell company Proton Motor, biofuels company D1 Oils, and Renewable Energy Holdings. It has invested in carbon trading specialists Econergy International, Trading Emissions and Climate Exchange, and is a participant in funds including Chrysalix Energy’s venture capital vehicle, and the Impax New Energy private equity fund.

Tchenguiz also referred to plans for cleantech and environmental funds, linked to specific Middle Eastern and African countries. While he provided few details about these planned funds at the reception,Tchenguiz and Keast divulged more specifics at a later meeting at the company’s Park Lane headquarters.

“Our approach to the environmental market is technology transfer,” Tchenguiz told Environmental Finance.“We take very early stage IP [intellectual property] and, if we can scale the IP transfer, you can bring in huge amounts of money.”

The “innovative approach” to financing such technology transfer involves tapping the little-known ‘offset’ market. These offsets are required when countries – typically in the developing world – enter into big-ticket defence or aerospace purchases. The seller will commit either to make direct investments in the buyer country or to facilitate third-party investments.These offset the large capital outflows involved, relieving potential pressure on the buying country’s currency.

The plan – for which Consensus would provide few details – is to tap into these outstanding offset commitments to help underwrite these country funds.The funds would invest in environmental infrastructure projects, with a particular focus on those that reduce greenhouse gas emissions. The first – in South Africa – received the nod from Pretoria in late July.

“Our intention is to roll out these climate funds around the world,” said Keast. They would likely be around $1 billion in size, with Consensus perhaps contributing 10% (although the South African vehicle will be smaller, at around $140 million), with “our strategic finance partners, and the larger banks” contributing the rest.

So why now? Keast notes that the company has been quietly making investments in the environmental arena for some time, including taking a stake in Dynamotive, a Canadian manufacturer of bioenergy systems, some four years ago. “It’s a new business area,” said Tchenguiz, “while our own business area, real estate, is quite mature. The technology side is extremely interesting, but the project side of these deals has the dynamics of real estate.”

“Over the last 18 months, this side of the business has come together,” said Keast, with the environmental arm of the group being formally created towards the end of last year. He added that the company has earmarked around £300 million for investment in the sector, and that figure is likely to rise.

So how is the new kid on the block perceived by more established environmental investors? “He’s certainly got a reputation for making money, and it’s great if he’s bringing money into the sector,” says one veteran London-based environmental investor. “But it’s very early days, and we’ve not seen any results so far.”

“We believe that we have a number of differentiators,” Keast said. “Our relationships, our access to capital from financial institutions getting into this space and, on the offset side, very strong relationships with governments around the world.

“But we won’t make a difference unless people know about us – the next step is to engage the corporate world. We aim to tackle climate change on a global basis.” Ambitious claims, indeed.