Tenaska Powers Up Fund II

Firm: Tenaska Capital Management LLC
Fund: Tenaska Power Fund II LP
Target: $1.5 billion
Placement Agent: Lehman Brothers

After using its first fund to make a little more than a dozen investments in U.S. energy companies and power-related assets, Tenaska Capital Management LLC is back on the buyout grid with its second vehicle. The firm is targeting $1.5 billion for Tenaska Power Fund II LP, which has a hard cap of $2.3 billion.

The Omaha, Neb.-based buyout firm is the private equity arm of Tenaska Inc., one of the largest independent power producers in the United States. With Fund II, the firm plans to take control stakes in a variety of power companies and energy assets throughout the country. The general partner will look to invest in power plants; natural gas storage facilities; electric and gas transmission services; energy and power infrastructure goods; as well as biofuels, wind energy assets and other renewable resources.

The investment strategy of the new fund will mirror that of the firm’s first vehicle. In 2005, the GP closed Tenaska Power Fund LP with $838 million in committed capital, well north of its $750 million target.

The firm used capital from Fund I to buy roughly 10 power plants, two companies that manufacture energy infrastructure products such as power lines and gas mains, and two natural gas storage facilities. In February, the firm exited the Commonwealth Chesapeake Power Station, a Virginia oil-fired plant it bought in 2005, selling it to Tyr Energy. Last year, Tenaska teamed up with buyout firm Warburg Pincus to buy three electricity-generating stations, one apiece in Wood County, Ohio; Armstrong County, Pa.; and Pleasants County, W.Va.

Lehman Brothers’s fund placement group is raising Fund II. Rowayton, CT-based placement agent C.P. Eaton Partners LLC raised Tenaska’s first power fund, but lost the mandate for the follow-up vehicle. The New Jersey Division of Investment has committed $100 million to the new fund. Investors in Tenaska’s first vehicle include Caisse de dépôt et placement du Québec, DuPont Capital Management and Mutual of Omaha Insurance Co.—J.P.