Braemar closes second fund on $250m(4)

New York firm Braemar Energy Ventures has raised $250 million for its second fund, which is more than 4 times the size of its predecessor.

Braemar Energy Ventures has raised $250 million (€177 million) for its second fund, which will continue Braemar’s strategy of investing in venture and expansion-stage energy and cleantech companies.

The increased amount of capital in the space is small compared to the overall opportunity.

Neil Suslak

The firm’s debut fund closed on $56 million in 2003. All of the firm’s original limited partners returned for the second fund, whose backers include Singapore’s government-run GIC Special Investments, CalPERS-backed PCG Clean Energy and Technology Fund and Macquarie, among others.

Braemar went out to market in late spring, and held a first close on $146 million in early August. The fund has completed one as-yet unannounced investment, which managing director Neil Suslak characterised as a “novel technology in the area of clean coal”.

Rising institutional interest in the sector explains the significantly larger size of the second fund, Suslak said. But although fund II is more than four times the size of its predecessor, Braemar’s strategy will not change much. The firm will target the same type of companies and technologies, but will increase the size of each investment to between $5 million and $20 million.

The firm has fully invested its first fund, and has made two exits out of that fund to date. Electricity company EnerNOC raised $100 million through its initial public offering on Nasdaq this May, and cellulosic ethanol technology developer Celunol merged with publicy traded enzyme company Diversa in a deal valued at $175.5 million in June.

A number of new funds have been raised for the trendy cleantech sector in recent months. Environmental Capital Partners, US Renewables Group and Kyoto Planet Capital Partners have all closed funds dedicated to cleantech in the last two months, and UK media mogul Richard Branson has announced that he will launch a $400 million Virgin Green Fund for cleantech.

Suslak said heightened interest in cleantech might not be a bad thing.

“I think it’s a benefit, on balance, because the increased amount of capital in the space is small compared to the overall opportunity in the space,” he said. “And the capital attracts entrepreneurs and management talent into the sector.”