Energy Funds Charged Up

When is a rookie energy fund not a rookie? When it’s staffed with a team that has been managing energy investments for a large private equity group. Such was the case last week when Cadent Energy Partners announced the closing of its debut fund, Cadent Energy Partners I.

The firm – based in the New York City suburb of Rye Brook, N.Y. – set out to raise $200 million when it launched in May 2004. The firm last week announced it has closed the fund at $220 million.

The investment team that launched the firm previously made energy investments with RBC Capital Partners, the PE unit of the Royal Bank of Canada. Managing Directors Paul McDermott and Bruce Rothstein and Partners Darin Booth and David Coppe are all RBC veterans. They are joined by Associate Alex Bell and Executive Advisor David Kennedy.

The Royal Bank of Canada is one of the fund’s limited partners, and the team still manages some of RBC’s energy investments. A spokeswoman declined to name any of the fund’s other LPs, but Cadent issued a statement that its LPs are comprised of university endowments, colleges, nonprofit organizations, funds-of-funds and individual investors. The firm says that the fund’s fee and carry structure are typical of the current private equity market.

Cadent is focused on North American investments in energy exploration and production; oil field services and equipment; and power services and equipment fields.

Cadent was not alone last week in announcing a new energy fund. Houston, Texas-based merchant bank Yellowstone Capital Partners announced it closed on Yellowstone Energy Ventures with $10 million. The venture fund will focus on early stage companies in the energy technology and renewable energy sectors.

Omar Sawaf, president of Yellowstone, said that anticipated increases in government intervention and incentives to reduce dependence on imported crude oil will help to make the renewable energy sector an attractive opportunity for investors.