$1.2bn energy fund sweeps past target

During an intensive period of activity in the energy sector, LS Power Group has completed a $1.2bn final close of its oversubscribed power sector-focused fund.

LS Power Group has announced the final closing of its power industry-focused fund, LS Power Equity Partners, at $1.2 billion (€968 million), exceeding its original target of $750 million (€605 million).

The fund will have a particular focus on acquiring power generation and related assets in the US from offices in New York, New Jersey, Missouri and Florida.

The power sector is complex and capital intensive.

Jim Bartlett, president, LS Power Equity Advisors

LS Power Equity Partners attracted interest from endowments, foundations, pension plans, corporations and family offices. Credit Suisse First Boston advised LS Power as placement agent, while Mayer, Brown, Rowe & Maw acted as legal counsel.

“The power sector is complex and capital intensive,” said Jim Bartlett, president of LS Power Equity Advisors, the manager of the fund, in a statement. “As the marketplace continues to evolve, and business models are further realigned, opportunities will continue to be created for experienced strategic industry players with significant equity capital.”

The fund’s close comes after a flurry of activity in the energy sector, in particular the acquisition of the midstream energy business of Dynegy by Warburg Pincus earlier this month. With backing from Warburg Pincus, Houston-based Targa Resources purchased Dynegy Midstream Services for approximately $2.35 billion.

Warburg has invested around $1.5 billion in more than 20 energy-related companies, and partnered with The Blackstone Group last year to provide $300 million of equity backing to Kosmos Energy to fund oil and gas acquisitions in West Africa.

Last month, New York and Houston-based AIG Highstar Capital, the private equity infrastructure arm of AIG, held an $800 million final close for its second fund AIG Highstar Capital II, which has already committed over $520 million to several investments including power generation facilities around the world and a water utility company in the US.

The fund closed two days after AIG agreed the $829 million sale of the Southern Star Central natural gas pipeline to GE Commercial Finance Energy Financial Services and Caisse de depot et placement du Quebec.