Virgin Green Fund to Launch Fund II

Virgin Green Fund, a private equity firm affiliated with Sir Richard Branson, the media and airline mogul, plans to launch a second fund, the Virgin Green Fund II LP, shortly, a person familiar with the plans told Buyouts, peHUB’s sister magazine.

The new fund will target $300 million and is expected to close by the end of 2011, the person said.

The San Francisco and London-based growth capital firm invests mainly in renewable energy companies and enterprises that develop efficient ways to use resources. It invests primarily in North American and European firms that have already achieved a measure of growth, helping to distinguish it from the many venture capital firms that operate in the renewable energy space.

Like Virgin’s debut fund, Fund II will be earmarked for investments of between $10 million and $30 million. The debut fund has so far made 10 investments, including some control situations, although most have entailed significant minority stakes where the firm takes an active management role.

Branson is a significant investor in the firm’s initial fund, which raised $220 million and closed in 2008. He also lent the firm his company’s iconic Virgin brand, which gave the upstart firm instant name recognition. Branson, a billionaire who has long championed environmental issues, is expected to invest in the firm’s new fund, the person said.

In the past, the firm has tapped Branson for investment ideas due to his experience in the energy-dependent transportation sector. Besides Branson, Virgin’s investors include pensions, endowments, foundations and family offices.

Among the firm’s notable portfolio companies is Gevo, which Virgin helped take public this year. Gevo develops biobutanol, a chemical used in liquid fuels that can be used as a gasoline blend that helps vehicles meet clean air standards. The company is listed on Nasdaq and has a market capitalization of $477 million.

Another notable portfolio company is GreenRoad, which makes equipment that helps people become safer drivers, while simultaneously improving fuel efficiency.