Scottish Equity Partners raises £135m for clean energy

The fund, backed by energy group SSE and a group of investors led by Lexington Partners, marks the manager’s first move into infrastructure.

Venture capital firm Scottish Equity Partners (SEP) has raised £135 million (€170 million; $223 million) for a new infrastructure vehicle to invest in UK-based clean energy projects.

The Environmental Capital Fund (ECF) has received the backing of London-listed utility SSE, which will initially invest £13.8 million for a significant minority stake, as well as a grouping of financial investors led by secondary specialist Lexington Partners.

The fund was anchored by the acquisition of SSE Pipelines, a UK gas transporter which ECF bought from SSE for £52.7 million. SSE Pipelines, which has over 130,000 gas connections, distributes gas to residential and commercial developments throughout the country.

ECF complements SEP’s Environmental Energies Fund, which was launched in 2011 and has since acquired a portfolio of venture and private equity cleantech investments from SSE.

ECF’s remaining dry powder will be used to invest in a portfolio of new, UK-based infrastructure projects in sectors including hydro power, energy efficiency, heat pumps and district heating.

Founded in 1991, SEP is a venture capital firm with a focus on the software, digital media, e-commerce, energy and healthcare sectors. It has raised five limited partnership funds since 2000 and typically invests up to £20 million in individual companies.

The firm has recruited a new team to manage ECF, headed by partner Gary Le Sueur.