UK venture capital firm Scottish Equity Partners (SEP) has today (2 September) announced it has raised £135m for a new infrastructure fund to invest in a diversified portfolio of UK-based clean energy projects.

The Environmental Capital Fund (ECF) will be used to support small-scale hydro power, energy efficiency, heat pump and district heating projects in a bid to meet an increased demand for capital from the UK’s rapidly growing clean energy market.

“The market opportunity for energy infrastructure finance is very attractive, and the new fund fits well with our existing activities,” explained SEP’s managing partner Calum Paterson.

The EDF has been backed by British electric utility company SSE as well as a syndicate of financial investors led by Lexington Partners, the world’s largest independent manager of secondary private equity and co-investment funds.

SSE’s finance director Gregor Alexander said: “We are delighted to participate in SEP’s new fund targeted at small-scale clean energy projects throughout the UK. The transaction ensures our resources are fully focused on SSE plc’s core purpose of providing the energy people need in a reliable and sustainable way whilst supporting future investment in clean energy.”

ECF marks the first move into the infrastructure market for SEP, but complements the Environmental Energies Fund (EEF) launched in 2011, which acquired a portfolio of venture capital and private equity cleantech investments from SSE.

Marshall Parke a managing partner in Lexington Partners’ London office, added: “This is the second time Lexington has partnered up with SEP and SSE in an innovative secondary transaction, this time for the infrastructure and clean energy sectors. Both sectors are relatively new to the secondary market, and areas in which we expect to see more secondary activity in the future.”

Luke Nicholls