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Grey Rock on opportunities in carbon capture; Ex-BDT, Golden Gate execs prep debut fund

Morning Hubsters!

This is Chris, for Wire Wednesday.

We’ve been knee-deep in trying to understand how the macro economy is impacting private equity. So far what we’re hearing is deal activity is slowing, and this includes exit activity, which means distributions, which have run hot for many years, are expected to slow.

Fundraising is slowing down, even if it’s not overtly apparent. Many LPs are at max capacity in terms of their pacing schedules, and tough decisions must be made to skip out on new funds from existing managers and/or miss out on new relationships.

One LP at a big public pension system told me the other day: “It’s not clear that the GPs have gotten the picture totally that the LPs are slowing down.” What are you seeing out there? Hit me up at cwitkowsky@buyoutsinsider.com.

Energy: Grey Rock Investment Partners recently invested $150 million in Vault 44.01, which works on carbon capture and sequestration. The CCS process involves the injection of carbon dioxide underground, where it is permanently trapped or transformed. There are currently 29 CCS facilities in operation around the world, capturing and storing 40 million tons of CO2 per year, writes Obey Martin Manayiti on PE Hub.

Vault 44.01 is engaged in multiple CCS projects throughout North America. “We are enjoying the first mover advantage,” Grey Rock co-founder and managing director Matt Miller said. “I think we are going to see a significant increase and investment in the carbon capture arena in the coming years, especially throughout the US.”

Miller said one of Grey Rock’s goals with Vault 44.01 is to “make economic returns that are competitive with traditional private equity returns.” In the US, he pointed out that there is a tax credit for CCS. Read more here on PE Hub.

Newbie: Riverspan Partners, formed by executives from Golden Gate and BDT Capital, is gearing up to raise its debut fund in the increasingly stingy fundraising market, I write today on Buyouts.

While fundraising has remained strong this year despite signs of distress in the wider economy, emerging managers are having a harder time attracting capital. LPs, especially in uncertain times, tend to stick with their known relationships and larger, more established GPs.

Still, many LPs are still looking to form new relationships and seek the outperformance that new firms generally produce. Several first-time funds have been battling to raise capital in the tough fundraising market this year. Read more here on Buyouts.

And get ready for our list of the Most Interesting First-Time Funds for 2022, which we’ll be publishing soon. So far there are more than 30 funds on the list of mostly first-time funds (maybe a couple second funds). We’ll let you know when the list goes live.

That’s it for me! Have a great rest of your hump day. Hit me up with tips n’ gossip, feedback or book recommendations at cwitkowsky@buyoutsinsider.com or over on LinkedIn.