By Jonathan Shieber
As First Reserve Corp. finishes investing from its first
infrastructure fund, the energy-focused private-equity firm is
beginning fundraising for a second fund targeted at roughly $1.25
billion, said a person familiar with the situation.
The first fund raised $1.23 billion in 2009 and was focused on
investing in power generation, regulated power transmission and
distribution, and midstream oil and gas transmission assets. Since
its launch, the fund invested in seven companies, many alongside
large corporate partners with experience in First Reserve's
targeted industries.
For instance, the firm paired up with SunEdison, the solar
development arm of MEMC Electronic Materials Inc. (WFR), to acquire
solar projects and with the Madrid-based wind developer Renovalia
Energy SA to buy its wind assets.
In the midstream oil and gas market, First Reserve joined with
publicly traded oil and gas company Triangle Petroleum Corp. (TPLM)
to form Caliber Midstream Partners LP; and worked with Energy
Corporation of America to form First ECA Midstream, which holds a
gas-gathering system in the Marcellus Shale.
Other assets in First Reserve's initial infrastructure portfolio
include the Fort Detrick power plant in Maryland; First Caribbean
Power and Midstream, a platform to own contracted power and
midstream assets in the Eastern Caribbean, and a similar company,
North American Power, focused on acquiring contracted power assets
in the U.S.
First Reserve is raising new cash at a time when more limited
partners are focused on infrastructure investments, according to
fund of funds investors who follows the market, and when the need
for capital has never been greater.
A March 2013 scorecard by the American Society of Civil
Engineers on North America's infrastructure gave the U.S. a failing
grade. The group cited America's transmission and distribution
network for electricity and its gas pipelines among the reasons for
the country's low marks.
However, a PricewaterhouseCoopers study surveying 2012 deals in
infrastructure indicated that demand for investment opportunities
is outpacing the available supply. The study singled out power and
energy as the most promising areas of opportunity.
The Society of Civil Engineers study estimated that the U.S.
would need to spend $3.6 trillion on infrastructure to address the
needs of the centuries-old system.
As Greenwich, Conn.-based First Reserve returns to the
fundraising trail, it joins a number of other investors trying on
the hard hat, and getting out the tool belt.
For instance, KKR & Co. (KKR) is a joint venture partner
with Suez Environnement SA's (SZEVY, SEV.FR) United Water unit in a
project to rehabilitate the water system in Bayonne, N.J., in a
$300 million deal, which includes 40 years of revenue payouts for
the firm and the company involved.
Other money managers and financial services firms, like
Macquarie Group Ltd. (MRN.AU, MQBKY), Natixis SA (NTXFY, KN.FR) and
Allianz Global Investor are raising infrastructure vehicles. Caisse
de Depot et placement du Quebec plans to add more assets to its
existing 5.75 billion Canadian dollar portfolio.
Bloomberg News previously reported news of First Reserve's new
fund.
(Dow Jones LBO Wire provides coverage of private equity deals,
funds and other related news. Go to http://pevc.dowjones.com)
Write to Jonathan Shieber at jonathan.shieber@dowjones.com.
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