Institutional investors have committed $382 million into a pioneering fund to invest in technology that extracts methane gas from coal mines in China and uses it to generate electricity.

The money was subscribed in the second stage of asset-raising for the China Methane Recovery Fund (CMRF), the fund’s sponsor Man Investments announced.

Man Investments, one of the world’s largest providers of hedge fund investments, said the fund could benefit the environment while earning returns for investors from sales of electricity and carbon credits.

Methane gas is a potent greenhouse gas which arises normally from mining. The investment projects are organised with Chinese partners under the Kyoto Protocol, an international agreement which encourages investment to cut greenhouse gas emissions in developing countries.

MTM Capital Partners, an asset management business specialising in environmental projects, will manage the fund. Man Investments has a majority stake in MTM.

The final stage of asset-raising for the CMRF will close before the end of the year, with a maximum of a further $164 million sought from institutional investors.

The CMRF is the first in a range of new environmentally-related investment funds that Man Investments intends to take to market.

Antoine Massad, chief executive officer of Man Investments Middle East Limited, described the venture as an exciting mix of environmental, social and commercial considerations.

“We are backing this fund because MTM’s strategy shows very good return potential,” Massad said.  “But equally important is its capacity to significantly benefit the environment by reducing harmful greenhouse gas emissions, and to contribute to China’s economic growth through installing much-needed additional electricity generating capacity.” – TradeArabia News Service