In an era of high prices, rising rates and economic uncertainty, investors are searching for strategies that can help stave off the ravages of rampaging inflation.
And as oil and gas prices spike, investments linked to energy and industrials are seeing renewed interest. Infrastructure has been a traditional inflation hedge.
One firm taking advantage of these dynamics is Bernhard Capital, which invests in companies that provide services to energy and industrial sectors. The firm recently reached a first close on its third flagship fund, sources told Buyouts.
Bernhard Capital, formed by Jim Bernhard, former CEO of the Shaw Group, held a first close on more than $350 million, the sources said. The firm is targeting $1.5 billion for Bernhard Capital Partners Flagship Fund III, Buyouts previously reported.
Bernhard is working with Metric Point Capital as placement agent.
The companies Bernhard target “provide essential services to critical infrastructure,” one of the sources told Buyouts. “They won’t touch anything commodity-related. It’s essentially a mid-market, buy-and-build strategy.”
Examples of Bernhard’s investments include Atlas Technical Consultants, which provides inspection services for industries like transportation, water and education; and Brown & Root, which provides engineering, construction and maintenance services.
Last year, Bernhard Capital sold Bernhard LLC (not to be confused with the name of the firm). Bernhard LLC, the firm’s first portfolio company, provides project and custom services, combining development, financing, design, construction and operations to reduce energy use, risk and cost, the company’s website said. The exit generated a 6x multiple and 40 percent IRR, a source previously told Buyouts.
The firm closed its debut fund, BCP Energy Services Fund, in 2016 on more than $750 million. Fund II closed on $1.2 billion in 2019.
Bernhard formed the firm in 2013 after he, alongside management, sold energy services giant Shaw Group to Chicago Bridge & Iron. Bernhard formed Shaw Group in 1987 with a small personal investment and grew it into a $6 billion (revenue) organization with 25,000 employees.
He leads the firm along with founder and managing partner Jeff Jenkins and partners Luke Kissam, Jeffrey Koonce and Mark Spender.