SCOTTISH Equity Partners (SEP) has raised £95 million to invest in clean energy technology.
The Environmental Energies Fund (EEF) was set up after months of talks with SSE Ventures. The financial details of the deal have not been revealed but SSE is transferring stakes in nine companies over to the fund but will continue as an investor.
The Scottish businesses are Glasgow's Smarter Grid Solutions, Edinburgh wave energy firm Aquamarine Power, Dundee-based Waterevolution, Livingston aerial surveyor Cyberhawk and hydro power specialist Green Highland Renewables. The others are English firms Vital Energy, Solar Century, Geothermal International and Anesco.
Pension fund Lexington Partners is a major backer with Hermes GPE, F&C Private Equity and Partners Group also involved. The announcement comes just days after SEP closed its £200m IV fund.
Gary Le Sueur, partner at SEP, will be leading EEF and is enthusiastic about the potential of clean energy.
He said: "SSE have picked some really exciting companies and will continue to be a major investor in the fund. These businesses can benefit from exposure to private equity and venture capital and we believe the skills and experience SEP has can add a lot of value."
Although the fund is closed and will not make external investments, SEP has an option to acquire stakes in five more companies from SSE Ventures.
Mr Le Sueur told The Herald he believes the £95m will be "more than adequate" even if the other firms are taken on. He added: "It is a lot of money as it is a big fund for what is quite a small number of companies."
A spokesman for SSE confirmed there would be no jobs lost at the Ventures arm as a result of the changes.
Gregor Alexander, SSE finance director, said: "By moving our cleantech investments into the Environmental Energies Fund we can ensure the companies are able to benefit from the track record and expertise of SEP, draw upon the financial resources of the new partners and ultimately deliver a better return on our initial investment."
However, SSE has retained a direct stake in one company, Aquamarine Power.
Martin McAdam, Aquamarine chief executive, said: "SEP has a 20-year track record in helping innovative companies grow and deliver value. Aquamarine Power is delighted to gain the financial and strategic expertise of this highly regarded fund manager along with the interest of substantial financial investors." Pål Ristvedt, from Lexington Partners, said: "Selecting the right partners is absolutely critical to the success of these deals.
"We believe the three-way partnership involving a major strategic player like SSE, the substantial energy and general investment expertise of SEP plus the secondary experience of Lexington Partners creates a very strong platform for managing these assets."
Research yesterday from the centre for management buyout research suggested the value of Scottish private equity buyouts fell 27% to £299m in 2011.
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