AIG Highstar closes $800m fund

Two days after agreeing to sell a natural gas pipeline system for $829m, AIG’s private equity infrastructure arm has held a final close for its second fund on $800m.

New York- and Houston-based AIG Highstar Capital, the private equity infrastructure fund sponsored by American International Group, has closed its second fund on $800 million (€660 million), almost doubling the size of its first fund, which closed on $406 million in November 2000.

AIG Highstar Capital II has already committed over $520 million to several investments, including power generation facilities around the world and a water utility company in the US. In addition, the fund invested $101 million in American Ref-Fuel, a waste to energy business that was sold to Danielson Corporation earlier this year for $740 million in cash and the assumption of $1.2 billion in debt. DLJ Merchant Banking was a co-investor in the transaction.

Win Neuger, CEO, AIGGIG

AIG Highstar, led by managing director Christopher Lee, recently announced another portfolio company exit – on Monday, the firm agreed to sell the Southern Star Central natural gas pipeline system to GE Commercial Finance Energy Financial Services and Caisse de depot et placement du Quebec in a transaction worth $829 million, a deal that reportedly earned AIG three times its initial investment.

Limited partners in AIG Highstar Capital II reportedly include British Columbia Investment Management, Everest Reinsurance, Kamil Holdings, Lexington Insurance, Mars Retirement Trust, Pioneer Group and Principal Life Insurance.

AIG Highstar is part of AIG Global Investment Group, the asset management arm of AIG led by Win Neuger. As of March 31, 2005, AIGGIG managed approximately $493 billion in assets, $15.8 billion of which were private equity assets.