EIG closes debut energy and infra fund on $4.1bn

EIG Global Energy Partners has closed its first fund since completing its spinout from Los Angeles-based asset manager TCW late last year. The fund, called EIG Energy Fund XV, closed above both its $2.5bn target and its original hard cap of $3.5bn.

EIG Global Energy Partners, the Washington DC-based energy and infrastructure fund manager that was formerly part of TCW, has closed its fifteenth fund on $4.1 billion.

Fund XV is the first fund EIG has closed since completing its spinout from Los Angeles-based asset manager TCW in December 2010. The final close exceeded both the fund’s original target of $2.5 billion and the original hard cap of $3.5 billion.

EIG Energy Fund XV launched in February 2010, and held a first close on $600 million last June. The fund will be focusing on oil, gas, renewable energy and energy infrastructure investments globally, according to Blair Thomas, chief executive of EIG.  The fund has already made three investments worth a total of about $560 million.

Thomas, who also served as chief executive of TCW Energy and Infrastructure Group, said the split from TCW gave EIG a “singular focus” that was “very well received in the fundraising process”.

“Clients like the fact that our firm does one thing and we are not distracted by being part of a larger financial supermarket,” Thomas said.

EIG offered limited partners 100 percent of the deal fees for Fund XV, according to Thomas, while prior funds had typically divided deal fees on 80 percent/20 percent basis.

Fund XV also had a higher percentage of non-US investors, relative to previous funds. About 45 percent of the capital for Fund XV was raised from foreign investors, according to Thomas. The bulk of those commitments came from European investors.

State and local pension plans committed 29 percent of the capital for Fund XV, while foreign pension plans committed 21 percent, according to Thomas. Ten percent of the fund’s commitments came from sovereign wealth funds, 13 percent from insurance companies, and 13 percent from corporate pensions. EIG also committed one percent of the fund’s capital.

In early April, EIG announced that it had committed $220 million in equity and $200 million in senior debt to a partnership with HM Capital to develop energy and infrastructure assets in Texas’ Eagle Ford oil shale. Thomas said that investment had been split between Fund XIV and Fund XV.

Thomas said about half of the fund’s portfolio would be focused on investments outside the US. In Australia, EIG has been “very active” in “developing and ultimately selling energy assets to big energy companies in Asia,” according to Thomas. In Europe, the fund will focus on renewable energy investments.

EIG’s split from TCW was agreed upon in October 2009, and completed 14 months later. TCW does not own a stake in EIG, according to Thomas, but the two firms will continue to share management fees through 2020.