Element Partners closes $486m Fund II

The cleantech-focused DFJ affiliate has closed its second fund slightly shy of its $500m hard cap. The fund's first investment was made last year in Quench USA, the largest marketer and distributor of bottle-less water coolers in the US.

Element Partners, a US private equity firm that is affiliated with Silicon Valley veteran Draper Fisher Jurvetson, has raised $486 million for its second cleantech-focused fund.

The fund has been in the market for at least one year, with a $400 million target and a $500 million hard cap. Placed by Greenhill & Co, it attracted commitments from limited partners including Dutch fund of funds Robeco Private Equity and US public pensions the Los Angeles Fire and Police Pension (LAFPP) and the Los Angeles City Employees’ Retirement System.

The firm’s first fund, which closed on $284 million in 2006, was nearly 70 percent invested as of August 2008, according to LAFPP investment documents.

Element II will invest in 20 to 25 companies across the cleantech sector, allocating roughly 60 percent of its capital to expansion stage companies, 25 percent to early stage companies and 15 percent to late stage, the LAFPP documents said. It is targeting a 25 percent internal rate of return and 3x multiple on invested capital.

In the third quarter of 2008, the fund made its first investment in water filtration company Quench USA.

Founded in December 2005, Element is led by managing partner David Lin and managing directors Michael Bevan, John Rockwell and Michael DeRosa. The four worked together previously either at Advent International or Enertech Capital Partners. Track records from their previous firms date to 1996 and give the team a combined history of having invested $251 million in 46 cleantech companies, with 19 exits producing a 63 percent gross IRR and 2.2x multiple, according to Robeco documents.

Element currently has 22 portfolio companies and more than $800 million under management across three funds.