Virgin’s green fund gets first $199m

By Chris Hughes in London
Published: June 27 2008 00:04 Last updated: June 27 2008 00:04
Wolverhampton City Council and Calpers, the influential Californian pension fund, have emerged as some of the maiden investors in Virgin Group’s first green investment fund.
Sir Richard Branson, Virgin’s founder, pledged to invest $3bn in alternative energy projects over a decade in September 2006 and last year set up the Virgin Green Fund (VGF) as a way of making investments in renewable energy and resource efficiency.
VGF has raised $199m from Virgin and institutional investors in its first close, according to a filing with the US Securities & Exchange Commission. The fund-raising followed a global roadshow and a second round of investment, targeting a similar size of funds, is expected. Virgin has a minority stake in the VGF management company.
The presence of a UK local authority pension fund among VGF’s investors comes as British pension funds are allocating an increasing proportion of their assets to so-called alternative investments.
Calpers’ investment has been made through PCG Clean Energy & Technology Fund, a California-based private equity group. Other investors in the VGF fund include Macquarie Bank’s Clean Technology Fund.
VGF focuses on late-stage projects, making it more similar to a private equity firm than to venture capital. It is headed by Shai Weiss, who joined Virgin from NTL following the cable group’s merger with Virgin Mobile.
The fund used backing from Virgin to start taking stakes in companies even before it had completed its first capital-raising. It has seven investments.
VGF is close to finalising a deal worth more than $40m to buy DuraTherm, a Texas-based petroleum and metal recycling business, from its founding shareholders. The transaction would mark a rare leveraged buy-out for the clean technology sector.
The deal would be in partnership with Masdar Clean Tech Fund, which has $250m under management.
Masdar’s backers include Credit Suisse, the Swiss bank, Siemens, the German engineering group, and Abu Dhabi’s alternative energy fund. Kevin Trant, formerly a manager at Siemens, is to move to Dura­Therm as chief executive.
Copyright The Financial Times Limited 2008