Wall Street Firms Eye "Green" Banking

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The roiling credit markets didn't affect global investments in clean energy last year -- they grew 41 percent in 2007 to $117 billion, according to New Energy Finance, a research firm. And the firm predicted that 2008 is going to be another "banner" year.

Wall Street has always followed the money, but this time its weightiest denizens -- the big investment banks -- are eyeing a new kind of green.

The billions of dollars being poured into clean energy and other "green" technologies amid global fears of soaring commodity prices, dwindling supplies of traditional energy and climate change have created new investment banking opportunities, from arranging the financing for solar power plants to taking geothermal companies public.

The roiling credit markets didn't affect global investments in clean energy last year -- they grew 41 percent in 2007 to $117 billion, according to New Energy Finance, a research firm. And the firm predicted that 2008 is going to be another "banner" year.

In response, some big banks, including Goldman Sachs (GS.N: Quote, Profile, Research), Morgan Stanley (MS.N: Quote, Profile, Research), Credit Suisse (CSGN.VX: Quote, Profile, Research), Lehman Brothers (LEH.N: Quote, Profile, Research) and Merrill Lynch (MER.N: Quote, Profile, Research), have recently begun creating investment banking groups dedicated to scouting out these so-called "cleantech" opportunities.

Tim Kingston, Goldman's head of power and renewable energy investment banking, said it's a "strategic priority" for Wall Street's biggest firm by market value. Other banks are stepping up their efforts -- Lehman and Merrill created formal clean technology banking groups earlier this year.

The value of global renewable energy deals was up 142 percent as of July 14, from the same time a year ago, compared with a 32 percent drop in overall M&A deal value, according to data provided by Dealogic for Reuters. Also, while the number of renewable energy deals increased 85 percent during the same period, there was only a 6-percent increase in the overall number of deals.

"This is all about driving down the cost of alternative sources of energy, particularly with oil prices at $140 a barrel," said Bryce Lee, who co-heads Credit Suisse's alternative energy banking practice. "This is the biggest issue and opportunity globally right now."

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