Cleantech entrepreneurs might consider turning off Sand Hill Road and heading to Park Avenue with today’s news that private equity firm Blackstone Group is establishing a new business group focused on cleantech investment. Blackstone, which has $113.5 billion worth of assets under management ranging from investments in Allied Waste to Legoland, will also provide advice on renewable energy strategies to its client portfolio. No details were given on the size of the new group’s investment capital.
The group will be led by James Kiggen, who has a solid cleantech background from his days as a Senior Vice President at AllianceBernstein. At AllianceBerstein, Kiggen managed a research team working on emerging sciences and technologies and oversaw late-stage venture capital and growth equity investments across a variety of cleantech plays, including battery startup A123Systems, carbon capture company Powerspan and agri-biotech firm Targeted Growth.
Blackstone has made a few recent moves into the renewable energy market. In July the company partnered with a German firm that plans to develop a 400 MW wind farm off the coast of Germany. That partnership followed on the heels of a $870 million investment in December 2007 in the (troubled) Bujagali hydroelectric project in Uganda by Blackstone portfolio company Sithe Global Power. Sithe builds and operates large power generation systems in developing countries, a severely undeserved, but potentially huge, market for renewable energy.
While venture capital investments in cleantech show no sign of slowing, Blackstone could provide a more diverse set of investment strategies than a VC firm. The lack of cleantech exits so far shows that cleantech firms develop differently from the IT plays many VC firms are used to.
Blackstone Group’s second quarter financials, released Wednesday, showed total revenues fell 63 percent to $353.7 million for the quarter, a net loss of $156.5 million.