Climate Focused GEF Beats Fund II Target

GEF Capital Partners has held a closing of GEF US Climate Solutions Fund II LP with $325 million of capital commitments exceeding the fund’s original $250 million target.

Limited partners in Fund II consist of numerous climate change focused institutions including Blue Earth Capital, HQ Capital, ODDO BHF, INGKA Investments, GEM Investments, Första AP-fonden, Quilvest Capital Partners, Granite Capital Management, and Nordea.

“While a vast majority of climate change capital is being channeled to infrastructure and venture funds as well as mega buyout funds, we believe there is also a need to capitalize lower mid-market companies,” said Nicolas Muller, a managing director at Blue Earth Capital. “Small-scale businesses are critical to the transition to a net zero and circular economy and require both capital and guidance from impact investors; we view GEF Capital as an ideal partner to support these businesses.”

“We are grateful for the support we received from a global and highly sophisticated institutional investor base seeking exposure to lower middle-market companies addressing climate change in the United States,” said Daniel Prawda, a co-founder and managing partner of GEF Capital. “We look forward to working with these investors to channel capital into companies providing innovative and cost-saving solutions for their customers to decarbonize and transition towards less expensive forms of renewable energy, as well as to find ways to maximize resource efficiency through the circular economy.”

GEF Capital invests in North America-based lower middle-market companies that have developed solutions to address climate change and pollution mitigation in the clean energy, energy efficiency, waste, water and resource efficiency sectors. The firm was founded in 2018 and has offices in Arlington, Virginia,  São Paulo, Brazil, and Mumbai, India.

To date, Fund II has invested in six companies: InSite, a Washington DC-headquartered provider of software used by real estate owners and operators to reduce energy usage and improve building performance in order to meet sustainability goals (2021); Lifecycle Renewables, a Massachusetts-based recycler of used cooking oil into a branded heating oil that is used by universities, hospitals and utility companies to attain net zero carbon emission targets (2022); Murf E-Bikes, a California-based designer and maker of electric bikes (2022); Polargy, a California-based designer of energy efficient systems for hot and cold aisle containment systems, modular walls and structural ceilings in data centers (2023); Civic Renewables, a Maryland-based provider of residential solar energy installation services (2023); and Next Step Energy Solutions, a Colorado-based provider of LED lighting systems used in the healthcare, manufacturing and commercial real estate sectors (2023).

With the closing of Fund II, GEF Capital announced the addition of two new operating partners: Eric Townsend, the former CEO of Bluesource, a Utah-based provider of carbon credit development, certification, and monetization services, and a portfolio company of GEF; and Radha Badani, a former manager of flagship and new-to-market brands at the Clorox Company and a partner at Chameleon Collective, a Florida-based consulting services provider that has worked with several GEF portfolio companies.

“Having Eric and Radha join our team allows us to continue with our ‘partner-first’ model in supporting innovative business leaders seeking capital and institutional know-how,” said Mr. Barkoff. “They come with a clear understanding of our investment philosophy and will deepen value creation and impact by providing sales, marketing, and operational expertise alongside our investment professionals and portfolio company management teams.”

“With a diverse portfolio of companies that are leading to real climate outcomes on a day-to-day basis, we are very proud of the investments that we have completed for Fund II,” said  Stuart Barkoff, a co-founder and managing partner at GEF Capital. “As private equity investors, it has been important for us to showcase that environmental outcomes, whether from the reduction of greenhouse gas emissions or other forms of harmful pollution, can result in strong financial and environmental benefits.”

FirstPoint Equity was the lead placement agent to GEF Capital for this fundraise. “It’s been an absolute pleasure working with GEF Capital, especially at a time when sustainable climate investment has never been more important. We’re proud to have attracted a broad spectrum of pre-eminent, responsible investors,” said Justin Bower, a co-founder of London-based FirstPoint.

Additional placement agent services were provided by Asante Capital, TritonLake and Impactus Partners.

Latham & Watkins was GEF’s legal counsel in the formation of Fund II.

© 2024 Private Equity Professional | April 23, 2024