Energy-focused ArcLight Capital Partners is going through dry powder like it’s going out of style. According to a Form D filing with the Securities and Exchange Commission last month, the Boston-based private equity firm-founded less than five years ago-is already raising capital for its third investment vehicle. ArcLight’s second fund closed about a year and a half ago.
Since October 2005, ArcLight Energy Partners Fund III LP has raised about $629.3 million from 34 accredited investors, according to the filing. The fund is targeting about $2.25 billion. A minimum investment limit of $10 million is noted, but ArcLight retained the option to wave it at its discretion. Calls placed to the firm were not returned.
If ArcLight closes Fund III on target, it will represent a substantial size increase compared to its previous two funds. The firm closed its second fund in July 2004 with $1.6 billion in limited partner commitments. Its inaugural fund, which announced its final closing on Oct. 1, 2002, raised $950 million.
When it comes to targeting acquisitions, ArcLight has a broad mandate, targeting assets throughout the energy spectrum, including production (the actual extraction of oil, natural gas, coal, etc.), midstream (the gathering, processing, storage and transportation of fossil fuels and hydro-carbons), and power generation (including power plants run on coal, hydro, wind and other renewable sources of energy).
Most of Fund I’s deals included equity investments of between $30 million and $60, while Fund II targeted transactions that could accommodate between $50 million and $100 million of equity. With Fund III’s significantly higher target, it is safe to assume that ArcLight will increase its equity investments again.
Of the 19 investments made with equity from Fund I, 10 have already been realized, according to ArcLight’s website. Fund II, which also has a total of 19 disclosed investments, has two exits under its belt.
In a previous interview with Buyouts, ArcLight Managing Director Robb Turner said the firm has differentiated itself by mostly avoiding the big corporate buyouts that are the bread-and-butter of large buyout shops like Texas Pacific Group. “We will do corporate buyouts, but we’d prefer to do single-asset deals like power plants or coal mines. Firms like TPG don’t generally do that because they are set up for much larger transactions,” said Turner.
ArcLight used Lehman Brothers to place its first fund, and Probitas Partners on for its second. This time, however, the space allotted to identify a placement agent was left blank on the fund’s Form D. Limited partners in previous ArcLight funds include CalPERS, CDP Capital-Americas, John Hancock Life Insurance Co., WestLB, Stanford University and the University of Texas Investment Management Co. (UTIMCO).