EIV Capital unveiled its fourth fund, as the Houston-based private equity firm looks to leverage promising midstream opportunities in an otherwise slow energy fundraising market.
EIV is targeting $750 million for EIV Capital Fund IV and a parallel vehicle, according to a Form D fundraising document. If successful, the new offering would collect about 67 percent more than its predecessor, which wrapped up in 2017 at a hard cap of $450 million.
Champlain Advisors is the placement agent for Fund IV, the document shows.
Disclosed investors in Fund III included City of Philadelphia Board of Pensions and Retirement, New York State Teachers’ Retirement System and Texas County and District Retirement System. Texas CDRS is also committing $100 million to Fund IV.
EIV did not respond to a request for comment prior to publication of this story.
EIV invests in lower mid-market businesses in North America’s midstream and downstream energy sectors, according to the firm’s website. It mostly targets companies involved in processing, transporting, storing or converting oil, natural gas and refined products, with Ebitda of $5 million to $40 million and values of $20 million to $200 million. EIV will also consider related opportunities elsewhere on the energy value chain.
EIV writes checks of $20 million to $80 million per deal for companies requiring growth equity, acquisitions of stand-alone businesses, carve-outs from larger organizations, and recaps.
Energy fundraising at low ebb
Global energy PE fundraising has been mostly in decline since 2014, when 86 vehicles collected $74 billion, PEI Research data show. Activity weakened further last year. A mere 16 funds closed at little more than $11 billion in the first three quarters, a small fraction of the $49 billion secured by 40 funds in all of 2018.
EIV’s midstream specialization, however, could better position the firm for fundraising relative to many of its peers.
The midstream space has been buoyed by a strong requirement in the oil and gas industry for more infrastructure to get abundant supply to new and existing sources of demand. To fund their projects, capital-hungry midstream businesses are increasingly turning to PE firms.
In addition, limited partners are attracted to midstream, Jeff Eaton, a partner with Stifel Financial Corp’s Eaton Partners, told Buyouts, because they previously committed little capital to the strategy. LPs are only now “catching up,” he said.
EIV has been active on the deal front of late. The firm last year invested in Houston-based Bayou Midstream and Dallas-based Canes Midstream, both full-service midstream companies, and Summit Terminaling, a Cumming, Georgia-based bulk liquids terminaling and logistics business. It also backed AMP Americas, a Chicago-based producer of renewable natural gas from waste products.
EIV is led by Managing Partner Patti Melcher, who co-founded the firm in 2009, and Partners Jenny Gottschalk, David Finan and Greg Davis. Davis was recruited in late 2018 from Kayne Anderson Capital Advisors, where he was a managing director.
EIV Capital Fund II had an investment multiple of 1.32x, generating an IRR of 25.1 percent, as of June 2019, according to a report published by San Diego City Employees’ Retirement System.
Action Item: Check out EIV Capital’s ADV filings here.