Carbon Hedge Fund Puts Fundraising On Hold

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New York-based Merzbach Group is shelving the fundraising effort for its carbon project finance fund while it gauges investors’ appetites and the future of the carbon market.

Founder Claude Devillers began raising money for the fund last April, garnering about $20 million in soft commitments from investors before putting fundraising on ice after the markets tanked in September. He told FINalternatives’ sister publication CleanTech Brief that he had planned to launch the still-unnamed fund with $40 million to $50 million.

Devillers said that he received a possitive response from potential investors last year, but was not able to find a lead investor before shutting down the process entirely. Now, Devillers said he’s concerned about the future of the carbon market.

“We’re mostly in the Kyoto Protocol and projects spaces in the U.S., and on the Kyoto Protocol side, there is still a lack of visibility post-2012,” he said. “There is a thin market post-2012 and the prices are low and since we monetize the future generation of carbon credits, we do need to have a firmer view of what’s happening. There’s a very important conference in Copenhagen in the next few days to discuss this.”

Devillers added that the carbon market’s short history coupled with the fund’s 18-month to two-year lockup may scare off a lot of prosecptive investors.