First Reserve’s new energy fund ups series target by $1B

Firm: First Reserve Corp

Fund: First Reserve Energy Infrastructure Fund II

Target: $2.5B

Amount raised: N/A

First Reserve Energy Infrastructure Fund II comes just two years after Energy Infrastructure Fund I targeted $1.5 billion and raised $1.2 billion, according to data from T-1 Banker and a statement from the firm.

The Greenwich, Conn.-based private equity firm is attempting to tap into a strong appetite for domestic and international opportunities in the booming business of extracting natural gas and oil from shale deposits. In the U.S., oil production continues to increase in what’s been hailed as an energy renaissance that has helped reduce oil imports from the Middle East for the first time in decades.

A spokesperson from First Reserve declined to comment.

Mark Florian remains managing director of First Reserve and head of its infrastructure group, with an eye on joint-venture deals in North America and Western Europe.

First Reserve is targeting long-lived assets in three energy verticals; contracted midstream, which includes pipelines, storage and LNG facilities; contracted power, including renewable generation and conventional generation; and regulated transmission and distribution, including electric and gas utilities, according to a statement issued with Fund I

“The advancement of our infrastructure investment program enables our team to offer broader and more strategic solutions to our energy industrial partners, and at a size and scale that is relevant,” First Reserve CEO William Macaulay said in a prepared statement about Fund I.

The first investment from the fund was a joint venture with SunEdison LLC called SunEdison Reserve, which was formed to own utility-scale solar photovoltaic power generation facilities.

First Reserve ranks among several big energy funds to wade into the market in a busy year for the sector. These include Riverstone LLC, which raised $7.7 billion for its Riverstone Global Energy and Power Fund V, its first to launch since it stepped out on its own from the Carlyle Group. [See accompanying chart.]

Among high profile exits in the energy sector, Apollo Group has filed an initial public offering for EP Energy Corp, just a year after it purchased the oil and gas production business from El Paso Corp for $7.2 billion. The IPO valuation has been reported at $8 billion, presenting a potential gain for Apollo in a short period of time.

Maine Public Employees Retirement System committed $50 million to First Reserve Energy Infrastructure Fund in 2010 and reported a return of 1.0x as of Dec. 31, 2012, according to data compiled by Buyouts.

Among energy and power leveraged buyouts carried out between 2003 and 2013, the most popular category was oil and gas with 265 deals, or 42 percent of all LBOs in the category, according to data from Buyouts. Power deals ranked second with 122 deals, or 19 percent of the total, followed by 103 deals, or 16 percent, for water and waste management.