Tenaska Power Fund Nears Close On Fund II, Which Has $2.5B Hard Cap

Firm: Tenaska Capital Management LLC

Fund: Tenaska Power Fund

Target: $1.5 billion

Hard Cap: $2.5 billion

Placement Agent: Greenhill, Lehman Bros.

Tenaska Capital Management LLC, the buyout arm of Omaha, Neb.-based Tenaska Energy is set to close fundraising for its second fund at the end of October, a source has told Buyouts. Underlining robust investor interest in the energy sector, commitments for Tenaska Power Fund II are expected to come in no less than the hard cap of $2.5 billion, well above a target of $1.5 billion, the source said.

Tenaska Capital provides services to the standalone Tenaska Power Fund family, whose debut fund closed in 2003 at $840 million, as previously reported in Buyouts. That fund is fully invested and roughly a third of this second fund is already invested, our source said. Tenaska Energy is a private power generation company formed in 1987. A spokesperson for Tenaska Capital declined comment on the status of the fundraising efforts.

The most recent deal for Tenaska Power Fund came in May with the sale of four power plants to APT Generation. Terms were undisclosed. Tenaska Capital partnered with Warburg Pincus on that deal, flipping properties owned for barely more than a year.

According to its Web site, Tenaska Capital invested “significant” capital in 2007, adding more than $800 million in assets, while total assets under management are now more than $3 billion. Tenaska Capital looks to acquire energy and power companies and assets in the United States.

Current power generation assets include the High Desert Power Project LLC in Victorville, Calif.; the Rio Nogales Power Project L.P. in Sequin, Texas; Holland Energy LLC in Beecher City, Illinois; and Rolling Hills Generating LLC in Wilkesville, Ohio; among others.

The fund also holds infrastructure assets, such as InstrastruX Group, a provider of utility construction services based in Bellevue, Wash., and natural gas assets, including Chestnut Ridge Storage LLC, a storage facility with a capacity of 17.5 billion cubic feet that’s expected to begin operation in the first quarter of 2009.

In early August, Tenaska Capital formed Voyager Midstream LLC, a Houston-based company set up to focus on making investments in midstream natural gas industry assets, including processing plants, gathering systems, pipeline transportation and gas storage facilities.