LPs Energized By First Reserve’s Twelfth Fund

First Reserve Corp.’s twelfth energy fund has sizzled this summer, garnering strong interest from the usual suspects.

At least eight return backers recently committed more than $1.3 billion, and roughly half of that amount came through in the first half of August in the form of six pledges totaling $690 million. The Greenwich, Conn.-based firm is targeting $12 billion for the fund, with a $16 billion hard cap.

All told, First Reserve had gathered more than $4.5 billion in commitments from 82 investors for Fund XII, as of a July 30 regulatory filing. With this kitty the firm intends to buy stakes in a global portfolio of companies in a variety of energy industry sectors, seeking investments ranging from $200 million to $1.5 billion. About half of the acquisitions will be in existing and to-be-developed energy manufacturing and services companies, but the firm also seeks to invest in energy and natural resources reserves; renewables and alternative energy; and energy-related insurance and financial investments.

First Reserve Fund XI closed with about $8 billion in July 2006. Funds VI through XI generated an overall gross IRR of 35 percent, according to a limited partner’s document.

The largest slug in the August surge came from the Pennsylvania Public School Employees’ Retirement System, which pledged up to $250 million to First Reserve Fund XII LP. This marked a big step-up from its first commitment of $200 million for First Reserve’s Fund XI. The Massachusetts Pension Reserves Investment Management Board re-upped to the tune of a $200 million commitment to First Reserve XII, its largest pledge to the firm yet. Previous slugs have ranged from $50 million for Funds VIII and X, $75 million for Fund IX and $125 million for Fund XI.

In one of its largest single private equity commitments, the Los Angeles County Employees’ Retirement Association pledged up to $100 million to First Reserve XII in mid-August. This is the third time that the LP has backed First Reserve, having committed $50 million to Fund X and $60 million to Fund XI. The Teachers’ Retirement System of Louisiana made its second pledge to the GP by committing $100 million to First Reserve XII. Also in August, the $11.4 billion Los Angeles City Employees’ Retirement System pledged up to $25 million to the fund. The LP’s past backing of First Reserve Corp. includes up to $20 million to Fund X and up to $30 million to Fund XI.

The smallest of the August slugs came from Colorado Fire & Police Pension Association, which re-upped to the tune of $15 million, after having pledged $10 million to Funds VIII, X and XI; and $5 million to IX. Earlier commitments came from San Francisco Employees’ Retirement System and Washington State Investment Board.