True Green Closes Oversubscribed Fund II

The Connecticut-based firm exceeded the $100M target for its second fund focused on distributed commercial solar power.

True Green Capital Management saw continuing interest in solar power from investors as it raised its second fund. Fund II, specializing in distributed commercial photovoltaic solar power, was oversubscribed at $113M, with many of the same investors from its first fund returning.

“We have long-term contracts and we have real assets, effectively enabling us to create a portfolio of unsecured debt obligation,” says managing partner Panos Ninios. “We have a number of repeat investors, particularly family offices, because we’re in a place where we can return capital back to them very quickly.”

Ninios says the firm’s investment strategy involves building solar plants and installing them at municipal locations, military housing, manufacturing companies, and retailers, like a shopping mall. However, its deals often look like real estate plays rather than the traditional PE approach of buying a company and exiting years later.

“What we do is identify projects where we can go build a solar power plant,” he says. “We secure the rooftop, lease agreements, easements, etc.” There are also government credits associated with solar power projects, and TGC sells them under fixed-price, long-term contracts with utilities.

While many institutional investors have soured on solar in recent years, Ninios says the key point of differentiation for TGC is that it’s not interested in powering homes—instead focusing on the commercial use of solar power.

“We’re typically on top of large shopping malls,” says Ninios. “The way

we look at distributed solar is that it’s an infrastructure investment. This is a $500B market of cap-ex in the U.S. over the next 10 years. So if you look at it against the backdrop that coal and nuclear plants are shutting down, the demand for energy is increasing. Distributed solar power is one of the few forms of power generation that you can realistically add quickly to the system.”

While TGC returns capital to investors every year based on cash flow from electric bills, the average fund life typically lasts seven years. Ninios says TGC adds value from the start of a transaction, because there are only a handful of firms that have the experience to create “bankable” projects out of these types of investments.

“We have a pretty large facility, and we keep buying,” he says. “Once a project is in operation, we have the contracts in place, it becomes reasonably straightforward to run, especially with solar. When the sun shines, you produce energy.”

True Green Capital was founded in 2011, and since then the firm has invested approximately $200M in a portfolio of more than 125 megawatts of assets in several states.