Paladin launches clean-tech fund

Los Angeles-based Paladin Private Equity Partners has launched its debut clean-technology fund. CalPERS, with a $40m commitment, is the cornerstone LP in the new vehicle.

Paladin Private Equity Partners launched its first clean-technology fund, which received a $40 million (€33 million) commitment from the California Public Employees’ Retirement System (CalPERS). The firm, based in Los Angeles, is seeking a total of $200 million for the new vehicle.

There’s a lot of opportunity in this area, but it is a very sophisticated place to be. We’re looking at things such as clean water and air standards, and what corporate America needs to do to keep up with those.

Tom Soto, co-head, Paladin Private Equity Partners

Tom Soto, a co-head of Paladin alongside Robert MacDonald, told PEO that the fund will be used to make primarily control investments in companies in the clean technology space, such as businesses in the energy-generation or water-treatment segments of the market.

“We live in an entirely different world than we did 10 years ago,” Soto said. “There’s a lot of opportunity in this area, but it is a very sophisticated place to be. We’re looking at things such as clean water and air standards, and what corporate America needs to do to keep up with those… our goal is to run ahead of those standards.”

Paladin, which has no relation to the Washington DC-based firm Paladin Capital, was originally founded in 1998 by William Simon as a private investment and merchant-banking firm. Simon, the former US Secretary of the Treasury, also runs the eponymous William E. Simon & Sons, a separate merchant bank, but he is no longer affiliated with Paladin Private Equity.

With the new fund, Paladin will look to write equity cheques ranging from $5 million to $15 million in size. “We’ll primarily be looking at post-venture companies with proven technologies and a steady base of customers,” Soto said, describing the firm’s investment strategy.

While neither Soto nor MacDonald have run a clean-energy fund in the past, each does have significant experience in the sector. MacDonald, for instance, was a founder of Catalyst Energy, one of the first alternative energy companies, which went public in 1984. Soto, meanwhile, has spent much of his time in the sector as an advisor, and helped lead such initiatives as the National Clean Air Act. He also served as a consultant to former vice president Al Gore and ex-California Governor Gray Davis.

The investment from CalPERS represents the growing interest from limited partners in the clean-technology space. CalPERS, in 2004, set aside $200 million specifically for investments in the clean-tech market. The pension made its first commitment in the sector last summer, with a $15 million investment in Santa Barbara-based NGEN Partners.

The Paladin commitment represents CalPERS’ second investment out of its environmental technology pool.