First Reserve closes Fund XII on $9bn

The buyout industry’s energy-focused veteran continues to prove LPs are keen on energy, topping its own record for the largest energy fund raised to date. The final close comes less than a year after its initial close, though is far from its $12bn target and $16bn hard-cap.

First Reserve Corporation has bested its previous fund by $1 billion and has again raised the largest energy-focused private equity fund to date with the closing of Fund XII on $9 billion. Its prior fund closed on $7.8 billion in 2006.

Energy remains a large, dynamic and complex industry.

William Macaulay

Fund XII, which had been marketed with a $12 billion target and $16 billion hard-cap, has held several interim closes, the first of which was in July 2008. Both returning and new investors made commitments during the “compressed timetable” for raising such a mega-fund, First Reserve said.

Its LPs include US public pensions The Virginia Retirement System, The Pennsylvania Public School Employees’ Retirement System, The Teachers’ Retirement System of Louisiana and the The Florida Retirement System.

“Fund XII provides us ample equity during what is expected to be an attractive investment environment in the coming years,” William Macaulay, First Reserve chief executive, said in a statement. “Energy remains a large, dynamic and complex industry where change creates new, attractive investment opportunities.”

He added the 25-year-old firm's history of investing throughout varying economic cycles gives it an advantage in today's marketplace.

Fund XII has already begun investing. Last October it invested $350 million in Reliant Energy, a publicly traded Texas utility. According to a filing with the Securities and Exchange Commission, the deal for convertible stock was part of a $1 billion financing package that also included a $650 million term loan from GS Loan Partners.