Managing partner Beverley Gower-Jones said:
I want to close at the hard-cap and I don’t see any reason why we shouldn’t in the next 12-18 months.
The fund held a ﬁrst close on £40m in May 2020, against its target of £100m. Clean Growth Fund, which is structured as a UK LLP, will invest in UK-based early-stage startups involved in clean technology in transport, power, energy and waste management.
Clean Growth Fund has a hurdle rate of 8% and a management fee of 2.5% up to £50m, and a 1.5%management fee on any commitment beyond that amount.
“We’ve seen a lot of interest from LPs domestically and internationally from family ofﬁces, corporates, endowments and sovereign wealth funds”, said Gower-Jones. “Covid-19 has meant investors are doubling down on green and clean. Climate change is now widely recognised as a huge issue that technology can mitigate and solve, so the atmosphere for fundraising has been extremely positive,” she said.
“The ﬁrm is currently raising funds virtually and over the phone in the wake of the coronavirus crisis,” said Gower-Jones.
“The main concern LPs have in the fundraising process is ticket sizes,” she said. “We’re aiming for a maximum commitment of £40m so as not to have the fund be too concentrated, but for larger investors this can be too small” said Gower-Jones. The fund has a minimum commitment size of £3-5m, depending on investor type.
Clean Growth Fund currently has two investors: CCLA Investment Management and the Department for Business, Energy & Industrial Strategy, each with a commitment of £20m. “At ﬁnal close we could have anywhere from six to 15 LPs,” said Gower-Jones.
Typical equity cheques will start at £500,000-3m for initial investments, with the potential for follow-on investments to be as much as £15m. It has a ﬁve-year investment period and a ﬁve-year divestment period and could hold up to 25 investments.
The fund has yet to make an investment following its ﬁrst close, but currently has a term sheet out with a pipeline of ﬁve or six companies spread across the fund’s sector focuses.
Pinsent Masons is providing legal advice and the ﬁrm is not yet using a placement agent.