BUYOUTS-Ex-NY State 1st Lady on board, private equity shop targets $300M

Wed Jul 11, 2012 4:32pm EDT

* NewWorld Capital raising debut fund

* A focus on energy efficiency, clean energy

* Silda Wall Spitzer joined in January

By David Toll

NEW YORK, July 11 (Reuters-BUYOUTS) - Executives of NewWorld Capital Group LLC, a New York-based private equity shop making growth equity investments in energy efficiency and related markets, are having second and third meetings with potential backers for a fund targeting $300 million. One of those executives joined in January with surprisingly little fanfare: former First Lady of New York State Silda Wall Spitzer.

In an interview this week, Chairman and Managing Partner Carter Bales, 73, said that his three-year-old firm, which has raised about $165 million between seed funding and capital for one-off deals, launched its debut institutional fundraising effort at the start of the year. The firm has held more than a hundred first meetings and calls with potential investors, including managers of funds of funds, family offices, insurance companies, universities and corporate pensions.

About $40 million to $50 million in commitments to NewWorld Environmental Opportunities LP is spoken for, said Bales. Ideally, he added, the firm would like to reach a $100 million first closing this November and to hold rolling closings, building to a final closing by the middle of next year. While not employing a placement agent to approach North American investors, the firm may hire one to help raise money from European investors later this year. Earlier in his career, as a managing partner of The Wicks Group of Companies, a New York private equity firm that specializes in education and media, Bales worked with Merrill Lynch to raise a $383 million fund in the late 1990s, and with Credit Suisse to raise a successor fund of $535 million a few years later.

NewWorld Capital makes growth equity investments in small and mid-size companies operating in five main markets: energy efficiency, clean energy, water resources and reclamation, waste-to-value and environmental services. Together, companies in these markets are generating some $350 billion in annual revenue in the United States and growing two to four times as fast as GDP, Bales said. They're taking advantage of long-term trends such as the planet's move away from dependence on oil and gas as energy sources; growing scarcity of water and other resources; the need to reduce pollution and head off global warming; and the desire by companies to reduce costs.

Within these markets NewWorld Capital prefers investing in complex situations involving U.S. and Canadian companies that have commercially viable products generating positive EBITDA and that need $15 million to $40 million to scale up production and distribution. The firm avoids technology risk, regulatory risk, hydrocarbon-pricing risk and capital-intensive business models. Through the first quarter of this year the firm had sourced and screened some 586 deals and closed two. The firm and a group of co-investors invested about $30 million in equity last August to acquire Cleaire Advanced Emission Controls LLC of San Diego for an estimated $55 million. The company manufactures filters that help reduce emissions from diesel engines used in trucks and other vehicles.

Earlier the firm committed $15 million in equity (to be invested in installments as the company hits milestones) to Denver-based Coolerado Corp., a maker of energy-efficient commercial air-conditioning units, Bales said. At the end of this month, the firm expects to have invested $12.5 million in equity in the company. NewWorld Capital intends to close two more transactions in the next quarter, including a third transaction next month using money from a $50 million separate account it manages for funds-of-funds manager North Sky Capital (known as Piper Jaffray Private Capital prior to its recent spin-out).

Bales emphasized that NewWorld Capital is not about double bottom-line investing. The firm is about generating a high return for investors; any good the companies end up doing for people or for the planet is simply a side benefit.

Still, the potential for doing good was an attraction for Spitzer. She joined NewWorld Capital in January as a principal after a stint as managing director at investment firm Metropolitan Capital Advisors. "For me it's all about impact," said Spitzer, 54, whose responsibilities include business development.

Spitzer, who early in her career was an M&A and corporate finance attorney at Skadden, Arps, Slate, Meagher & Flom LLP, has been working to reduce air pollution through a number of recent activities. As First Lady of New York State from 2007 to 2008, Spitzer worked on programs to promote the administration's goal of a 15 percent reduction in fossil energy consumption by 2015; she is co-vice chair of the Urban Green Council, the New York chapter of the U.S. Green Building Council, which works to reduce energy consumption in cities.

Spitzer said she met Bales about five years ago after someone recommended him as a great person to help her get up to speed on environmental issues. Ever since, Bales has been sending her "tomes" to read and names of conferences to attend and sharing ideas over breakfasts and lunches. Spitzer said that as she watched the creation of NewWorld Capital it became a "dream to be a part of it."

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