Energy, infrastructure fund manager splits from TCW

EIG Global Energy Partners has established itself as an independent fund manager with $8.5bn under management. Formerly the energy and infrastructure group of TCW, EIG will continue to share management fees with TCW until 2020.

The former energy and infrastructure group of TCW, the Los Angeles-based asset manager and Societe Generale subsidiary, has been spun out into an independent firm specialising in energy and energy-related infrastructure investments. The new firm, Washington-based EIG Global Energy Partners, says it will retain both staff and clients it had as a unit of TCW.

R. Blair Thomas will continue as chief executive of the now-independent firm. The separation was planned 14 months ago, according to Thomas, and thus was not influenced by the management troubles and staff departures at TCW over the past year.  Instead, Thomas said the energy and infrastructure team wanted to “own the upside” of their business and free themselves from regulatory red tape.

As an independent firm, Thomas said EIG will avoid regulation associated with being part of a large financial institution, including “conflicts associated with being both a bank and a private equity firm”.  

“We get to focus on what we do best, and not focus on regulatory things that don’t apply to us,” Thomas said. “It’s just a lot harder to be successful as part of big financial institutions today because there are so many limitations placed on you.”

EIG said in a statement that it has $8.5 billion under management.

EIG will continue to share management fees with TCW. Thomas declined to discuss details of how the fees would be split. But he said that TCW would retain a “minority position,” adding that “the size of their position decreases over time and then ultimately goes to zero”.

He said that management fees for funds raised currently through to 2020 will be shared with TCW.

Thomas said that the spin-out had been agreed in October 2009, and that the parties had then planned for a 14-month “transition period” which expired December 31, 2010.

He said that the management problems at TCW came after that agreement had been struck. Former chief investment officer Jeffrey Gundlach was fired in December 2009, and sued by TCW for allegedly stealing proprietary client information to establish his own firm, DoubleLine Capital. More than 40 colleagues also left to join DoubleLine, according to Reuters. Gundlach’s departure also triggered a “key-man” clause that resulted in TCW having to liquidate a $500 million public-private investment fund.

“Clearly it’s been a challenging period at TCW but our separation was agreed months before all that happened, so it didn’t have any effect on us,” Thomas said.