Tuesday, Jul 08, 2008

(This item was originally published Monday.)

 
  
   By Margot Patrick and Stefania Bianchi  
   Of DOW JONES NEWSWIRES  
 

Man Group PLC (EMG.LN), the world's largest hedge fund group by assets, Monday stepped up its push into environmental investing with plans to raise $1.5 billion for a fund aimed at reducing carbon emissions.

With a $300 million commitment and development support from Abu Dhabi government investment firm International Petroleum Investment Co.International Petroleum Investment Co., the fund marks Man's biggest launch to date at its new environmental investing unit, and comes as investment firms look to tap growing investor interest in socially responsible environmental projects that also aim to make attractive returns.

"Our objective is to play a meaningful role in the environment," Rikky Hassan, managing director of Man Group subsidiary MTM, told reporters at a press conference in Abu Dhabi.

Man Group Chief Executive Peter Clarke, also speaking to reporters in Abu Dhabi, said there is a "keen appetite" from investors for these kinds of products.

The MENA Associated Gas and Global Environment Fund will invest in projects to capture hydrocarbons released in the crude production process that can then be used for other gas products and electricity generation. It will be structured as a private equity fund with a 10-year investment period. U.S. engineering company Fluor Corp. (FLR) is the fund's technical partner.

Gases from crude oil production are largely flared, or burned off, adding huge amounts of greenhouse gases to the atmosphere.

According to the World Bank, more than 150 billion cubic meters of natural gas are flared each year - equivalent to 25% of U.S. and 30% of European Union annual gas consumption.

The organization estimates that flared gas adds 350 million tons of carbon dioxide in annual emissions.

By harnessing the released gas, Hassan said harmful carbon emissions are reduced, the energy production process becomes more efficient, and investors stand to make returns from the byproducts and carbon credits.

He told Dow Jones Newswires the fund has a series of projects lined up in the Middle East and North Africa, and that initial construction of the first recovery system should start later this year.

Beyond its $300 million capital commitment, IPICIPIC will help the fund establish and implement its projects, which typically would involve some level of government participation or oversight. IPICIPIC manages global energy investments of about $13 billion for the Abu Dhabi government.

Man Group launched its ECO environmental private equity unit 15 months ago in a strategic move that was largely driven by former chief executive Stanley Fink.

Fink had served on the board of London-based investment manager MTM for about a decade before Man Group took a majority stake in it last year.

The MTM unit also runs Man's China Methane Recovery Fund, a $600 million private equity fund that finances projects to extract methane from coal mining and use it to generate electricity and carbon credits.

Man Group has about $78.5 billion under management. Its main business lines are its $24 billion AHL strategy, which makes automated trades based on price movements in markets including stocks, bonds, foreign exchange, energy and commodities, and a set of funds that invest in pools of external hedge funds.

 
  
   Company Web site: www.mangroupplc.com  
  
   -By Margot Patrick and Stefania Bianchi, Dow Jones Newswires; +44 20 7842 9451/+9714 364 4967; margot.patrick@dowjones.com/stefania.bianchi@dowjones.com  
 

(END) Dow Jones Newswires

08-07-08 0444GMT