Conduit’s Latin Power III sets record with $393m

New York-based Conduit Capital Partners has wrapped up fundraising for its third fund targeting power generation projects in Latin America, with commitments totaling $393 million – making it the largest PE fund to be raised for the region since 1998.

Conduit Capital Partners, a New York-based private equity firm targeting energy investments in Latin America, has made a final close on $393 million (€311 million) for its Latin Power III fund. The vehicle is the largest private equity fund to be raised to invest in the Latin America region since 1998.

Nearly two-thirds of the fund’s capital was committed by US-based investors, with the remainder sourced from investors in Australia, the Middle East, and Europe. Investors included the Overseas Private Investment Corporation (OPIC) – which provided a $60 million debt commitment – five US university endowment funds, the Australian Post Superannuation Scheme, Australia’s MTAA Superannuation Fund, a large Middle Eastern government investment authority, Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), The Netherlands Development Finance Company (FMO), the Andean Development Corporation (CAF), some high net worth individuals and a number of other large institutional investors.

Swensen: ’phenomenal’ investment opportunities in Latin America’s energy sector

According to Scott Swensen, co-founder and chairman of Conduit, the fundraising for Latin Power III was launched two and a half years ago, with the first close made 17 months into the fundraising process. “It was a long, long process,” said Swensen. “The issue was that investors’ results in Latin America have largely been disappointing, and many investors are concerned about the region’s risk.”

However, the situation results in a “phenomenonal” investment opportunity, said Swensen, adding, “Latin America is one of the few regions in the world that is sorely in need of additional capital, and the energy business in Latin America is growing very, very rapidly.”

Conduit has already made two investments through the Latin Power III fund, including a greenfield natural pipeline project called Libramiento and constructed on behalf of Mexico’s state-owned petroleum company Petróleos Mexicanos (PEMEX).

The fund has a nine-year term and makes control-stake investments in medium-sized power generation plants, primarily in Mexico, Central America, Peru and Chile. According to Swensen, the fund will make a total of 10 to 15 investments, roughly half of which will be greenfield projects, while the other half will consist of acquisitions of existing assets.

Conduit also manages the 1993-vintage Latin Power I ($100 million) and 1998-vintage Latin Power II ($157 million) funds, which were launched by Scudder, Stevens & Clark and then acquired by Deutsche Bank in 2002. Conduit was formed in 2003 upon the management team’s spin-out from Deutsche Bank.