NGP closes $348M fund for late-stage energy technology

Washington, D.C.-based private equity fund NGP Energy Technology Partners said today it has closed its second cleantech fund of $348 million.

NGP Managing Partner Philip Deutch told the Cleantech Group his firm is now on the lookout to invest between $5 million and $25 million of growth capital in established U.S.-based cleantech companies with technology-related products and services. The second fund closed in early June, but was announced today.

“We’re late-stage investors,” he said. “We look for experienced management teams with a proven track record and disciplined strategic plans, focusing on alternative energy, energy efficiency, power, or oil and gas technologies.”

He said the firm is focused on energy technology related to the electric grid, energy storage and efficiency, as well as oil and gas technology that either lowers the cost of finding and delivering oil or may lower the environmental impact of doing it.

Deutch said the firm looks to make prudent, risk-adjusted investments over a three- to-five year period, but is not motivated as much by time as how attractive the investment is.

NGP closed its first fund of $148 million in December 2005, bringing the company’s management total to nearly $500 million today. The firm is an affiliate of Irving, Texas-based NGP Energy Capital Management, a $9.3 billion family of funds that invests in the energy sector and was founded in 1988.

“The ability to close the [second] fund in these financial markets is really a function of our strategy, our experience and the track record we have with fund I. Our investors were very supportive of a late-stage approach to energy technology investment,” he said.

Twelve cleantech companies benefited from its first fund including Arizona-based wind blade manufacturer TPI Composites, Ohio-based silicon module maker Xunlight, and Vermont-based solar integrator groSolar (see groSolar funding - integrators interesting to VCs?).

Another one of its portfolio companies, Boston-based SatCon Technology (Nasdaq:SATC) priced a common stock offering to raise $20.2 million in June 2009 for working capital, general corporate purposes and possible acquisitions. The company, which provides power electronics to the renewable and distributed energy markets worldwide, has a $130 million market cap.

TPI raised $22 million in Series A funding, in a round led by NGP in 2007, followed by another $20 million in its Series B, in which NGP also participated (see Smart energy gets smart money and Investors keep eyes on water filtration).

Deutch wouldn’t disclose specific amounts the firm has invested in its portfolio companies, but the annual revenue for those 12 companies exceeds $300 million.

Though the firm was established in 2005, Deutch said some of its partners have been investing in the sector since 1997, giving them experience that only a handful of other funds have.

“It’s allowed us to avoid some of the areas that have proved difficult to invest in,” he said, citing early-stage technology intensive biofuel plays or inventions started by a couple scientists with a blank sheet of paper.

In 2008, NGP also participated in a $17.5 million Series D round in Poway, Calif.-based ISE, which was looking to grow sales of its hybrid-electric drive systems for heavy-duty vehicles (see ISE raises $17.5 million for hybrid engines and Cleantech deals in garbage, lighting and batteries).