What's exciting Lord Fink then?

The hedge fund doyen and Conservative treasurer has gone green.

By Candice Krieger, April 7, 2011
Lord Fink

Lord Fink

With political commitments aplenty, Stanley Fink, the Conservative Party treasurer and recently appointed peer, could be forgiven for putting his business pursuits on the back burner. Not likely.

The multi-millionaire veteran hedge fund manager is as focused as ever. The chief executive of International Standard Asset Management (ISAM) - a small hedge fund chaired by Labour Party fundraiser Lord Levy - Lord Fink has also been turning his attention to the clean technology sector, which he believes could provide investment opportunities greater than the internet.

He is the chairman of Earth Capital Partners, set up in 2008 to invest in sustainable and renewable energy. The fund hopes to raise more than $5 billion over the next few years to plough into areas such as renewable energy, energy efficiency, sustainable agriculture and forestry, water and other clean technologies.

Lord Fink, 53, says: "While it would be impossible today to live in a totally sustainable way, you can probably get rid of about 90 per cent of the non sustainability in our lifestyles. The technology exists to generate most of our power out of recycled materials. This is no longer a question of science fiction but a question of putting the financial mechanisms in place to ensure that people do the right thing. That's why I'm particularly excited by the 'green space' as people call it. It's a huge investment opportunity."

He made the comments at a recent UK Israel Business roundtable discussion, adding that investors can expect to receive unleveraged returns of around 10 per cent or more.

Lord Fink set up Earth Capital Partners to invest in renewable energy

Lord Fink set up Earth Capital Partners to invest in renewable energy

According to forecasts, there is an estimated $5 trillion investment opportunity up to 2030 in new renewable energies globally. "You can do sustainable investing in many ways but the biggest investments will be purely infrastructure - taking renewable technologies such as wind and solar and putting them into achievable projects that have long-term contracts with power companies or the national government. They provide real assets which is something that pension funds are looking for."

And then he knows a thing or two about investment.

Dubbed "the Godfather" of the hedge fund industry, Lord Fink is considered to be one of the most accomplished in his field. A brain tumour in 2005 hastened his decision to step down from his position as chief executive of Man Group - the world's largest listed hedge fund - where he spent more than 20 years, to pursue his many philanthropic interests. But he has since resurfaced at ISAM and more recently, Earth Capital Partners (ECP) - something he appears particularly passionate about.

"I started to get interested in the environment about five or six years ago. I was reading a lot of press articles and people's cases for and against global warming. It became clear that the path we were going down was unsustainable."

ECP closed its first fund - launched in partnership with major energy company E.On - at the end of 2009 and hopes to have a second closing by June. The ECP Renewable Energy Fund One targeted €750 million (£658 million) to invest in solar and waste energy projects across Europe, the Middle East and North Africa.

When it comes to the UK, he notes the nation has an aggressive target of committing to source around 15 per cent of its energy from clean sources by 2020, which should represent a cumulative investment opportunity of £70 billion across all renewable technologies. Biomass-to-energy represents a £10 billion investment opportunity, solar photovoltaic a £5 billion opportunity and wind a £40 billion opportunity.

He points out that the government is committed to the green agenda, adding that "the Prime Minister's philosophy is to try and free start ups and small companies from as much red tape as possible."

Besides, "we can't be reliant on 80 per cent of our energy coming from the Middle East, especially in countries like Saudi where sooner or later there will be a change in politics which could double oil prices over night."

Yet Lord Fink, measured and detailed in his comments, acknowledges that when it comes to clean-tech start-ups, Britain lags behind Israel, which has far more - the largest number in the world except for America. They include Shai Agassi's Project Better Place (transportation) and Netafirm (smart irrigation).

What are the factors driving the Israeli sector? The Kibbutz pioneers. "Israel has a long tradition of sustainability and self-sufficiency in challenging living conditions with limited natural resources. The country also has a proven track record of successful start-ups and a strong venture capital community with a focus on clean tech. There is also access to international capital. Silicon Valley is following Israel closely." The country has particularly favourable conditions supporting solar energy. Leading companies include Zenith Solar, Heliofocus and AORA.

Plus, Israel has the highest ratio of university degrees to population in the world. According to Lord Fink, the UK government needs to incentivise students to do science at university. "We probably have a plethora of arts degrees but we don't produce enough scientists in our university system."

In addition to ECP, ISAM and his political commitments, Lord Fink remains devoted to philanthropy, particularly health and education. An important communal benefactor, he is the first president of the Evelina Children's Hospital, attached to Guy's and St Thomas's, and is a founding trustee of Absolute Return for Kids (ARK).

He is married to Barbara. The couple have three children.

Last updated: 12:01pm, April 7 2011