Hastings sets $250 mln target for energy-services fund

  • Hastings sets $300 mln hard cap for Fund IV
  • New fund targeting gross returns exceeding 30 pct
  • Rhode Island weighs $25 mln commitment

Hastings Equity Partners is targeting $250 million for investments in small and midsized energy-services businesses, a fund presentation released by Rhode Island State Investment Commission shows. The fund has a $300 million hard cap.

Rhode Island is considering committing up to $25 million to the fund at its Feb. 28 meeting, its meeting materials say.

Hastings Equity Fund IV will invest in companies that provide services and equipment to North American oil-and-gas businesses. The typical portfolio company will have trailing earnings between $4 million and $20 million.

The firm is led by Managing Director and Founder Ted Patton along with Managing Directors Tanner Moran and Joe Conlon. Katrina Starr-Frederick is chief financial officer and chief compliance officer.

Fund IV is targeting gross rates of return exceeding 30 percent, a memo prepared for Rhode Island by Cliffwater says.

Fund III, which closed on $172 million in 2014, was grossing a 44 percent IRR and netting 27 percent as of Sept. 30, according to its presentation. Fund II, a $61 million vehicle that is no longer an active fund, grossed a 21 percent IRR and netted 13 percent.

At least 3 percent of the fund’s total committed capital will come from general partners. The GP group is entitled to 20 percent of the fund’s profits, so long as Fund IV exceeds its 8 percent preferred return.

Hastings will charge LPs a 2 percent management fee during the fund’s investment period. Afterward, the fee falls to 1.5 percent of invested capital with a floor equal to 0.9 percent of committed capital, according to Cliffwater.

LP fees will be offset by whatever revenue the fund generates through commitment, breakup, consulting, transaction, financing and banking fees. Monitoring fees that the fund’s portfolio companies pay to Hastings will offset LP management fees for up to $150,000 per company per year.

Hastings did not respond to a request for comment.

Action Item: The Hastings presentation: http://bit.ly/2HRT1o4

Clouds are seen above a refinery as Hurricane Ike approaches the Gulf of Mexico near Houston on Sept. 12, 2008. Photo courtesy Reuters/Carlos Barria