By John Bowker

MOSCOW (Reuters) - Russia-focused Wermuth Asset Management has launched a 200 million euro ($263 million) fund for investing in clean energy technology projects, a move it hopes will attract foreign companies to a fledgling sector of the Russian economy.

Russia's notoriously inefficient use of energy, typified by the state-controlled supply of central heating to houses in winter that is impossible to turn off, and has made greater energy savings as one of the priorities of its modernisation programme.

The Tatarstan Cleantech Fund (TCTF) is to back companies developing anything from energy efficient housing materials to electric buses, as long as they base their operations in Russia, and particularly the central region of Tatarstan.

It has targeted the Yelabuga region in Tatarstan as the ideal destination for overseas firms to base their projects, as it is a special economic zone with benefits such as tax breaks.

"Yelabuga can compete in some cases with the world's lowest cost manufacturing locations such as China," said Daniel T. Colbert, the TCTF's lead partner.

WAM, a Germany-based fund manager that has operated in Russia for more than a decade, said it had attracted 100 million euros from the regional government of Tatarstan to back companies, and hopes to raise a further 90 million euros from private investors.

Ten million euros will come from its own pocket.

"There was a clean-tech bubble in 2006 and a lot of money was lost," said WAM founder Jochen Wermuth. "Clean-tech valuations are now much lower as the bubble has burst."

Tatarstan has agreed that private investors will receive a greater proportion of returns from successful projects as long as the company has helped to develop the local economy -- through creating jobs or building a new plant.

Wermuth played down concerns that local government corruption could hamper the fund's progress, saying there was no obligation to move ahead with a deal if it did not look above board.

WAM is targeting returns of 30 percent a year on the investments over a 10-year lifespan - higher than a typical private equity or infrastructure fund would target.

"The fund aims to build value in portfolio companies so that they can later either be sold or gain liquidity for an initial public offering (IPO)," said Colbert.

The launch of the fund diversifies WAM from primarily being an equity investor into private equity and venture capital. It now has around $300 million under management -- including the 110 million euros raised for the new clean technology fund.

The group's Quant Strategy Eastern Europe fund gained 1 percent in 2011, which compared with a 22 percent fall in Russia's RTS stock market index.

($1 = 0.7615 euros)

(Editing by Greg Mahlich)