Leaf Clean Energy Co, which invests in clean-energy companies mainly in North America, agreed to merge with closed-end investment company Trading Emissions Plc in an all-share deal, creating the largest carbon-focused company listed in London.

The deal constitutes a reverse takeover for Leaf Clean under the AIM rules.

The acquisition will be conducted on a formula asset value basis and will consist of a share-for-share exchange.

The combined entity will have a portfolio of carbon credits, renewable energy projects and other carbon exposed assets in the United States, Asia, Africa and Latin America, the companies said.

Trading Emissions specializes in renewable energy projects and emissions instruments such as carbon credits.

At 1330 GMT, Trading Emissions shares were up 1.1 percent at 93.5 pence on the London Stock Exchange. They touched a high of 100 pence earlier in the session.

Leaf Clean shares fell 16.1 percent before recouping some of the losses to trade down 12.9 percent at 67.5 pence.

(Reporting by Kumar Alagappan in Bangalore; Editing by Mike Miller)