The Carlyle Group and Riverstone are riding the lightening attracted to the clean energy sector and have hit the lights on a renewable energy fund along with their third global energy and power fund. The two firms raised about $4.5 billion in commitments on the two new joint funds.
Carlyle and Riverstone announced last week the close of Carlyle/Riverstone Global Energy and Power Fund III with $3.8 billion (besting its $2 billion target) and Carlyle/Riverstone Renewable Energy Infrastructure Fund I with $685 million (which was targeted at $300 million). Both funds closed in the first quarter and allow for co-investments.
The majority of LPs in the third energy fund were investors in the $1.1 billion fund II that closed in 2004. The firms managed to add more public pension funds with the newer fund. In all, LPs include the California Public Employees’ Retirement System, the New York State Common Retirement Fund, the Delaware Public Employees’ Retirement System and Sonangol, the oil and natural gas manager for Angola. Fund III has a 1.5% management fee and a 20% carried interest rate.
The energy and power fund will make buyout and growth capital investments in the energy and power industries with a focus on midstream, exploration and production, power, oilfield service and downstream companies.
About 70% to 80% of the fund will be invested in the United States.
So far, the new power fund has made a few deals, including agreeing to purchase the natural gas storage business of EnCana Corp. (NYSE: ECA; TSX: EnCana) for about $1.5 billion.
Carlyle and Riverstone also joined with Goldman Sachs Capital Partners in committing $500 million to launch Cobalt International Energy LP, a Houston, Texas-based oil and gas explorer and production company in the Deepwater Gulf of Mexico.
The third Carlyle/Riverstone Global Energy & Power Fund also teamed with Cherington Capital to acquire International Logging Inc. (ILI), a Houston, Texas-based provider of well site drilling and formation evaluation services. NewStar Financial provided leverage, while ILI management also received an ownership percentage.
Meanwhile, the firms raised the new funds as the exit market has been kind to private equity-backed energy companies.
Last quarter’s largest IPO offering for a private equity-backed company came from Dallas-based oil and gas company EXCO Resources Inc., which raised $650 million. Company shareholders include Ares Management, Cerberus Capital Management, Oaktree Capital Management and Greenhill Capital Partners.