Exclusive: Tribeca starts raising third fund

Following its exit from two thermal power plants, a developing LNG facility and a microbrewery this year, Tribeca has launched its third and most ambitious fund to date.

After announcing its full exit from two Colombian thermal power plants late last week, Tribeca Asset Management (Tribeca) has confirmed that it is liquidating its maiden fund and initiating fundraising for its third and largest fund to date. 

According to Jaime Ramirez, investment manager for consumer goods/retail and energy/natural resources at the firm, Tribeca will today begin distributing all of the money invested in the first fund, bringing total return to investors across the lifetime of the company to $452 million. 

Tribeca has hired BerchWood Partners as placement agent for the fund, and Ramirez said that Tribeca president Luc Gerard's visit to Washington DC to take part in an LP conference was viewed as the unofficial kickoff to fundraising efforts.

“We are officially in fundraising mode now,” Ramirez said. “We are still working on putting up the data room for all the potential investors, but we hope to have everything ready in probably June and then start the road show visiting all of the potential investors.”

Ramirez said that with its third fund, Tribeca is looking to diversify an investor base which until now has been almost 100 percent supported by local investors. 

“The idea is to get some re-ups from these local investors, but then to get the biggest share from international investors, particularly in Europe and the US,” he said. 

The fundraising goal was reported at $400 million, with a hard cap of $500 million in case of expected over-subscription.

“It's a bit of a progression, because our first fund was over $130 million, our second fund was about $260 to 270 million and now we're trying to reach $400 million. So we're trying to grow the size of our funds,” Ramirez said.

The fund will primarily target Colombian projects but will also keep an eye on the regional picture as well, he explained.

Continuing with the current investment focus, Tribeca plans to allocate funds as evenly as possible across the infrastructure, energy/natural resources, healthcare and consumer goods sectors, though Ramirez said it is likely that infrastructure and energy projects will be a little “overweight” due to the hefty price tags that come along with projects in those sectors.

The decision to exit two Colombian power plants – the 314 megawatt (MW), dual-fuel Termocandelaria peaking plant, and the 918 MW Termobarranquilla SA ESP (TESBA) gas-fueled continuous cycle plant, which consistently operates at about 70 percent capacity and Ramirez said is the most efficient plant in Colombia – was one that has been in the making for about three years.

“There was one fact that triggered the exit and that was the fact that we are actually running out of gas in Colombia,” Ramirez said. “We have maybe another four or five years of reserves unless there is obviously a discovery. Both TESBA and Termocandelaria generate with gas. The latter is a dual-fuel plant, so it can generate with fuel oil, but it's very expensive so it's much more efficient and cheaper to generate with gas, and TESBA only generates with gas so that was a big problem for us.”

With that in mind, Tribeca started working on a project to build an LNG regasification plant in the country, which they saw as one of only a few ways they could create enough value and interest in the two power plants that were held under the operating umbrella of Termocandelaria Power Limited (TPL). The LNG project was not easy to get moving, Ramirez said, but once it was added to a list of the government's top priority infrastructure projects – dubbed PINE (Proyectos Estrategicos de Interes Nacional) projects – Tribeca knew that things were moving in the right direction. Plans were then initiated to make their exit from the industry in October last year.

“At that point we said, well listen, now that we're not really creating a lot of value for these plants because of the nature of the plants themselves – once you have a plant up and running and it's generating at close to capacity there's not a lot you can do to generate more value – we said now that we have a solution for the lack of gas, it's probably a good time to go out into the market,” Ramirez said.

Tribeca's 60.75 percent share in TPL was acquired by the three existing partner shareholders in the company – Moneda Asset Management, SCL Energy Activa, and Bancard – and Mercantile Colpatria.