Energy Spectrum Partners secured $950 million for its eighth midstream energy private equity fund, according to an SEC filing.
The amount raised, which includes commitments from the general partner, puts Energy Spectrum Partners VIII within reach of its $1.3 billion target. If successful, the fund will be 6 percent larger than Fund VII, which closed in 2014 at more than $1.2 billion.
Fund VII was backed by 93 limited partners, among them endowments and foundations, family offices and pension plans. Disclosed investors included California State Teachers’ Retirement System and San Francisco City & County Employees’ Retirement System.
Alaska Permanent Fund committed $75 million to Fund VIII, while University of Houston System and Reno Foundation both committed $5 million.
Dallas-based Energy Spectrum did not respond to a request for comment on its fundraising activity.
Energy Spectrum invests in lower mid-market companies that acquire, develop and operate North American midstream energy assets. The firm focuses on crude oil and natural gas gathering and transportation, processing and treating facilities, storage facilities and other infrastructure assets. Its preferred investment range is $50 million to $200 million.
Fund VIII has already begun investing. Earlier this year, it made an undisclosed investment in Pinnacle Midstream, a Houston-based developer of midstream infrastructure for oil and gas producers operating in basins across North America. The company was launched this year.
The fund is also identified as a backer of Frontier Midstream Solutions, a Tulsa, Oklahoma-based midstream business. Frontier in April partnered with Concho Resources to create Beta Crude Connector, a builder and provider of crude oil gathering, transportation and storage services.
Energy PE fundraising has been in decline globally since 2014, when 84 funds collected $72 billion, according to PEI Research data. Activity has been especially weak this year. To date, 16 funds have closed at a combined $11 billion, a small fraction of the $49 billion secured by 35 funds in all of 2018.
Earlier in October, Tailwater Capital raised more than $800 million toward a $1 billion target for its fourth energy fund, Buyouts reported.
Established in 1995, Energy Spectrum has invested in more than 55 companies, according to the firm’s website. Its founding partners are President Thomas Whitener, James Benson and CCO James Spann. Other members of the leadership team include Partners Peter Augustini, Benjamin Davis, Mark Honeybone, Michael Mayon and Chandler Phillips.
Energy Spectrum’s Fund VI generated a net multiple on invested capital of 1.3x and a net IRR of 8.41 percent as of June, according to Preqin data, while Fund V generated a net multiple of 1.9x and a net IRR of 32.65 percent.
Action Item: Learn more about Energy Spectrum Partners here.