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Politically Connected Clean-Tech Shop Seeks $400M

A Los Angeles-based firm with deep political connections, Craton Equity Partners, is seeking $400 million for its second fund, Buyouts reported, citing to a source familiar with the firm’s plans.

Craton Equity makes growth capital investments in companies in the clean technology and environmental technology sector. Its portfolio includes Arxx Corp., a manufacturer of insulating concrete forms that hold concrete in place; EnLink Geoenergy Services Inc., an installer of devices used for geo-thermal heat pump systems for commercial and institutional buildings; and Liquid Environmental Solutions Corp., a non-hazardous liquid waste collection and treatment company.

The firm raised around $191 million for its first fund in 2006, according to Capital IQ.

Craton Equity is led by Robert MacDonald, a professional in Solomon Brothers’s municipal bond department from 1972 to 1979 who went on to help found Catalyst Energy Corp., an owner of electric and thermal energy generation plants; Tom Soto, an environmental activist and former environmental adviser to the Clinton and Obama administrations; and Kevin Wall, also an environmental activist who in 2007 teamed up with former Vice President Al Gore to launch Live Earth, an organization dedicated to creating events aimed at heightening awareness of climate change.

The firm has not hired a placement agent for fund II, the source said. “I think Soto is so high profile, he can open more doors” than a placement agent, the source said.

The firm already has some high-profile investors, including the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and New York State Common Retirement Fund.

Fund I was generating a .90x investment multiple and a -10 percent net internal rate of return as of Dec. 31, 2010, for CalPERS. CalPERS had committed more than $38.15 million to the fund, which had called more than $25.5 million by that same date.

Craton did not return a call seeking comment.