Equinox Carbon Equities Eyes Investors
Date: 10-Jul-09
Country: UK
Author: Nina Chestney
LONDON - U.S. carbon brokerage Equinox Carbon Equities is considering at least two offers for a stake in the company, president Billy Barnwell told Reuters.
"We were offered a good sum of money (in May) for an equity stake in our company. We recently received another potential offer for about $30 million which we are entertaining and developing a structure for," he said in a telephone interview late on Wednesday.
Private investor GEOSUMMIT offered to buy up to 40 percent, or 200,000 shares, of Equinox for some $20 million in May.
Barnwell said $20 million represented "far less than half the value of the company."
Equinox has also received offers from other firms "in the business of needing what we will create in vast quantities," Barnwell said, including the $30 million offer.
Only 18 months old, Equinox Carbon Equities has offices in Nevada and California's Newport Beach. Brokering and trading carbon credits are the core of the business, but it also advises on certifying clean energy projects and invests in them.
The company is currently working on a swap transaction with an unnamed client which is selling half a million European carbon emissions permits, known as EU Allowances, in exchange for Kyoto-backed offset credits.
Barnwell said Equinox was also involved in a similar type of trade for a large deforestation emissions reduction project and a deal involving 280,000 voluntary carbon credits.
FINANCIAL BOON
In the midst of the worst financial slowdown since the 1930s, Barnwell said Equinox Capital was still making money.
"I think (the downturn) has been a boon," Barnwell said.
"We have seen real opportunities when others are pessimistic because they are pigeonholed in their business models."
Equinox plans to merge its trading advisory services with a small-cap investment banking firm which has an energy trading platform.
"They are completely immersed in the trading process in the energy area while we are more focused on the environmental commodities side. There is some good synergy to merging those aspects together," Barnwell said.
Declining to name the company until the arrangement is finalized, Barnwell estimated that the relationship could save the firm around 60 percent on its transaction costs over time.
Looking at the domestic market, the eventual emergence of an emissions trading scheme in the United States would benefit the firm. But Barnwell does not see business suffering without it.
The United States plans to introduce a domestic cap-and-trade scheme but it still has to be approved by the Senate. About 85 percent of carbon permits would be given to industry for free and the rest sold.
"More than $800 billion worth of allowances will be passed out to industry. I am sure (some of those) companies won't spend them wisely and will be a boon to companies like mine," he said.
The likelihood of the bill being passed by December is slim, due to a general lack of understanding about the carbon market's complexities, Barnwell said.
(Editing by Mark John)