Energy Capital has held a final close of Energy Capital Partners Mezzanine Opportunities Fund, LP at $805 million in total commitments, significantly exceeding the fund’s $500 million target.
The new fund was formed in response to a strong flow of attractive debt and preferred equity opportunities seen in the normal course of deal screening for the firm’s private equity vehicles. According to Energy Capital, these opportunities often require flexible junior capital but fit a risk-adjusted return profile that the firm believes is more appropriate for a mezzanine investment than a typical equity investment by the Energy Capital’s private equity funds.
“This is an important milestone in Energy Capital’s history that broadens our role as a leading capital solutions provider to the energy industry by responding to a market opportunity to offer flexible funding alternatives via the mezzanine fund,” said Doug Kimmelman, Senior Partner at Energy Capital Partners. “The macro environment, our strong origination network and our existing footprint across many energy industry subsectors continue to present a large number of attractive investment opportunities for the firm. We are grateful for the strong interest and support of our existing private equity investors and for the addition of several new investors and will continue to focus on delivering solid investment performance across all our funds.”
The new fund is targeting investments in debt and preferred equity across the entire energy value chain with a particular focus on fossil and renewable power generation, electric transmission, midstream oil and gas, energy efficiency and conservation, environmental and energy services.
Energy Capital Partners has already closed two investments for its new fund including the recapitalization of Chieftain Sand and Proppant LLC, a frac sand producer; and the project financing of a subsidiary of Sungevity, a distributed generation solar provider to the residential sector.
“The enormous and accelerating capital needs of the energy industry are facing constrained capital availability from traditional sources caused by broad macroeconomic factors and the exit of European project finance banks and other lenders from the North American energy marketplace,” said Nazar Massouh, Energy Capital’s Principal leading the firm’s mezzanine investment activities. “This phenomenon is particularly true for middle market companies. Potential borrowers have shown a strong interest in our mezzanine funding solutions and we look forward to deploying this capital in a diversified portfolio of energy investments that meet our return criteria.”
Park Hill Group acted as placement agent for Energy Capital Partners Mezzanine Opportunities Fund, LP. Park Hill Group is an alternative asset placement agent providing placement fund services for private equity funds, real estate funds, and hedge funds, as well as secondary advisory services. The firm advises on all aspects of the fundraising process including competitive positioning and market assessment, marketing materials and related documentation, and partnership terms and conditions most prevalent in the current environment. Additionally, Park Hill provides global distribution capabilities through its senior relationships across the limited partner arena. Park Hill has offices in New York, Chicago, Dallas, San Francisco, London, Dubai, Hong Kong, Singapore, Sydney and Tokyo (www.parkhillgroup.com).
Energy Capital Partners has over $8 billion in capital commitments and invests in the power generation, electric transmission, midstream oil and gas, renewable energy, oil field services and environmental services sectors of North America’s energy infrastructure. The firm has offices in Short Hills, NJ and San Diego, CA (www.ecpartners.com).
© 2013 PEPD • Private Equity’s Leading News Magazine • 2-22-13
