EIF, I Squared team up on clean energy project

Energy Investors Funds (EIF) and infrastructure investment manager I Squared Capital will be working together to construct the Oregon Clean Energy Centre (OCEC) in Ohio, a greenfield 869 megawatt (MW) combined-cycle natural gas-fired generation facility, the two firms said in a joint statement on Monday.

EIF will be investing in the project through its EIF United States Power Fund IV, a private equity fund the firm closed on $1.71 billion in October 2011. I Squared will be drawing funds from its maiden vehicle ISQ Global Infrastructure Fund, which it launched in September 2013 targeting $2 billion. As of this past June, I Squared had raised $1.2 billion for the vehicle that will invest in energy, utilities, and transport with a greater emphasis on the US and Europe.

The two firms did not disclose the size of their respective investments but said that they will be equal partners in the project.

“The plant’s output will play a critical role in the Pennsylvania-New Jersey-Maryland (PJM) wholesale electricity market, which is slated for 12,000MW of coal plant retirements in the near future,” according to the statement.

The centre, which is expected to begin commercial operations in July 2017, will create approximately 500 jobs during construction and 25 jobs on-site after completion.

“I Squared Capital’s investment in OCEC is consistent with our strategy of investing in clean, efficient generation that will benefit from the new paradigm, arising from abundant natural gas and environmental regulations, in the US electricity market,” I Squared partner Adil Rahmathulla said.

The project which has used loans from EIF’s USPF IV fund has been developed by North America Project Development (NAPD), a joint venture formed in 2011 by Bill Siderewicz and Bill Martin to develop combined-cycle gas turbine plants, primarily in the Northeast US. NAPD will retain an interest in the project, the firms said in the statement, without disclosing a specific figure.

The Ohio Power Siting Board approved the OCEC in May 2013.

Based in New York and founded in 1987, EIF is one of the first private equity firms to focus on independent power and the electric utility sector. As of September 30, 2014, the firm managed over $4 billion across four commingled private equity funds and related co-investment vehicles. In October, EIF announced that it will be acquired by a subsidiary of Los Angeles-based Ares Management, a transaction expected to close before year-end.

Founded in 2012 by former executives of Morgan Stanley including Sadek Wahba, Gautam Bhandari and Adil Rahmathulla, New York-based I Squared Capital specialises in energy, utilities and transport in the US, Europe and select high-growth markets. In July, the fund manager entered into a strategic partnership with Japanese business conglomerate Mitsubishi Corporation to collaborate on infrastructure investment. A Mitsubishi affiliate has also committed $100 million to I Squared’s debut fund.