An Arlington private equity firm has closed its second fund and it looking to deploy $325 million into "lower middle-market companies" in the U.S. and Canada over the next two years.
GEF Capital Partners, based at 1300 17th St. N. in Rosslyn, originally sought to raise $250 million for its US Climate Solutions Fund II investment vehicle, but higher-than-expected demand for an entity that's looking to back companies working to address climate change and pollution mitigation saw GEF fetch more than it anticipated.
Daniel Prawda, one of the firm's founders and managing partners, told me GEF wants to invest between $25 million and $50 million per company and expects to make between eight and 10 investments over the next 24 months.
"We seek control positions in companies and do so in partnership with a company’s founder and management," Prawda told me in an email. "We are generally the first institutional investor in these companies."
He described the fund as an alternative to climate change-based investments.
Traditionally, investors looking to back climate change solutions have contributed to either capital-intensive infrastructure funds, which invest billions into long-term physical assets such wind farms, or venture funds, which make small investments in promising but not-yet profitable startups.
Prawda said GEF's Fund II fits between these two investment options as it aims to invest in founder-led, profitable companies with established technologies that address climate change. He said these companies are usually seeking capital to help scale or build out the go-to-market strategy of their products.
Since its founding in 2018, GEF has backed more than two dozen companies, and its new fund has already deployed capital into six companies. Two of them — InSite, makers of a data-optimizing platform for buildings, and Civic Renewables, a residential solar panel installation company — are based in D.C. and Bethesda, respectively.
"There is an abundance of investment opportunities in clean-energy businesses that already generate earnings and deliver climate change or pollution remediation outcomes today," Prawda said. "These nuts-and-bolts companies are often overlooked by larger investment funds and therefore have less access to capital."
Fund II has backing from international investors such as Zug, Switzerland's Blue Earth Capital; Bad Homburg, Germany's HQ Capital; and Paris-based ODDO BHF.
In addition to Rosslyn, GEF also has locations in Sao Paulo, Brazil, and Mumbai, India. It employs about 45 people, and its U.S. team of eight investment professionals is based in Greater Washington.
The close of GEF's new fund is the latest of several local private equity investment vehicles that have landed significant sums in recent weeks.
In early March, D.C.'s Capitol Meridian Partners closed its $900 million fund that'll be used to back firms operating in the technology, aerospace, defense and government services industries.
Accion Venture Lab Fund II LP, a D.C. venture capital fund targeting fintech startups around the globe, surpassed the halfway mark toward its goal of raising $80 million in late February.
And a few weeks prior to that, D.C. investment firm Accolade Partners surpassed over $1 billion from three funds to offer investments in young tech and health care companies.
