Blackstone’s greentech effort fades to black by Dan Primack @FortuneMagazine April 6, 2011, 1:56 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The Blackstone Group BX has given up on its green dreams, nearly three years after launching a dedicated effort to invest in late-stage and growth equity cleantech opportunities. Fortune has learned that Blackstone recently decided to shutter the unit, which began raising a $500 million fund just days after Lehman Brothers collapsed. It secured $90 million from Western European investors last summer – or around $105 million, including both Blackstone and partner capital – but couldn’t manage to reach a second close. The idea had been to help fill the so-called “capital gap” between early-stage VC funding and later-stage project financing (which was particularly tough to come by as credit tightened). Prospective investors, however, didn’t seem convinced by the return potential — and generally closed their wallets to most first-time strategies. A source says that Blackstone plans to continue actively managing out the existing portfolio, which includes companies like Coskata, Pacific Biosciences and Rive Technology. Any committed capital not needed for follow-on investments will be returned to limited partners. Jamie Kiggen, the Blackstone senior managing director in charge of cleantech, will transition into the firm’s larger technology group (which recently lost both Chip Schorr and Ted Coons). No word yet on the plans of managing directors Walter Vester or Richard Troyer, who worked with Kiggen on the platform. All three men had joined Blackstone from AllianceBernstein. A firm spokesman declined to comment.