Energy Capital Partners targets $6 bln for Fund IV

  • New fund will invest in energy infrastructure
  • Typical deals could include as much as $750 mln of equity
  • Previous fund netting 9 pct IRR

Energy Capital Partners is raising $6 billion to invest in North American energy-infrastructure assets, a fund summary prepared by one of the firm’s potential LPs says.

Energy Capital Partners, which has offices in Houston, San Diego and Short Hills, New Jersey, plans to make 10 to 20 investments through Fund IV, the summary shows. The firm invests across a wide range of energy-related assets, including fossil-fuel and renewable-power facilities, pipelines, gas-storage facilities and service providers. Typical equity investments will range $250 million to $750 million in size.

In August, Energy Capital Partners led an investor group including Canada Pension Plan Investment Board to take power-generation company Calpine private for $5.6 billion cash. The deal is expected to close in Q1.

Energy Capital Partners’ previous fund, which raised $5.1 billion in 2014, was netting a 10 percent internal rate of return as of Sept. 30, a source with knowledge of the fund said. The firm’s 2010 fund was netting a 15 percent IRR as of that date.

Fund IV limited partners will pay a 1.5 percent management fee on committed capital during the fund’s investment period, the summary says. Afterward, the fee falls to 1.25 percent of invested capital. The firm is also offering some discounts, taking into account commitments across multiple funds, as well commitment size and participation in the first close, the source said.

If Energy Capital Partners starts charging management fees on a new vehicle with $3 billion of commitments or more during Fund IV’s lifespan, the vehicle’s management fee will drop to 1 percent.

The GP will commit at least $100 million to the fund, assuming the vehicle raises $3 billion, the summary says.

Energy Capital Partners was founded by Douglas Kimmelman in 2005. Rahul Advani, Schuyler Coppedge, Rahman D’Argenio, Murray Karp, Pete Labbat, Tyler Reeder, Scott Rogan and Andrew Singer are partners at the firm.

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Pipelines carrying steam to wellheads and heavy oil back to the processing plant line the roads and boreal forest at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 74 miles south of Fort McMurray, Alberta, on Aug. 15, 2013. Photo courtesy Reuters/Todd Korol