The Connecticut Retirement Plans and Trust Fund is considering a commitment of up to $50 million to ArcLight Energy Partners Fund V, which is targeting $2 billion for North American energy infrastructure investments.
The $25 billion retirement system, which has an 8 percent target allocation to alternatives, would make the investment through its $800 million alternative investment fund, according to state documents.
Fund V will primarily invest in power generation and utilities, midstream infrastructure and production.
ArcLight Capital Partners has raised around $1.5 billion for the fund as of last week, having received almost $900 million in commitments since May, according to US Securities and Exchange Commission filings.
The fund, which launched in 2009, struggled to generate commitments early on. LPs attributed the initially weak support for Fund V to two factors: one was shifts in the firm’s investment strategy. The firm’s first two funds focused on high-risk, high-reward private equity style investments. Its third and fourth funds have relied on comparatively low-risk, low-reward infrastructure investments. Sources also indicated that the rapid marketing of the firm’s prior funds had not given LPs the chance to judge performance. ArcLight had raised four funds totaling $4.65 billion between 2003 and 2007.
ArcLight’s $2.1 billion fourth fund has generated a net internal rate of return of 9.7 percent with a 1.2x net multiple as of 31 March, 2011, according to ArcLight presentation documents.
The firm was founded in 2001 by Daniel Revers and Robb Turner and manages $6.8 billion across its first four funds, according to its website.