LS Power’s fourth fund beats target with $2.25bn final close

LS Power Equity Advisors closed its fourth US-focused power and energy infrastructure fund on $2.25 billion, beating its target and expanding its LP base in overseas markets.

Commitments from 40 institutional investors and several high-net-worth individuals enabled the firm to beat its original $2 billion target, a source familiar with the process told Infrastructure Investor. The firm spent roughly seven months in market for LS Power Equity Partners IV, launching in late September 2017 and hitting a quick $1.5 billion first close in December.

There was a “very high” re-up rate from investors in previous LS Power funds, the source said. Around 25 percent of the fund’s capital came from outside the US, with European LP commitments registering particularly strong growth. Investors from the Middle East and Asia also committed to the fund.

The source added that LS Power is aiming for the fund to produce returns at the high end of what investors might expect for an opportunistic infrastructure fund. Investments will range between $200 million and $500 million per deal with a four- to five-year hold period expected, according to pension documents made public earlier this year.

“This capital, coupled with our capabilities, positions us well for the opportunities to come,” Dave Nanus and Joe Esteves, who co-head LS Power’s private equity group, said in a statement.

The firm declined to comment further for this story.

LS Power Equity Advisors is the investment arm of US power company LS Power. The firm has raised more than $8.59 billion in equity commitments across four funds, focusing investments on operating power and energy infrastructure assets in the US.

LS Power’s fundraising for its first infrastructure vehicle began in 2005 and collected $1.2 billion. The firm raised $3.09 billion in 2007 for the second incarnation and $2.06 billion in 2014 for the third. The three funds are returning a net IRR of 12.9 percent, 11.7 percent and 13 percent respectively, according to pension documents.

The company’s assets are located across the US, with many of its power plants in New England and the Midwest. Its most recent acquisitions include power generation assets in Pennsylvania, New York, Rhode Island and Maine.

Evercore Private Funds Group was the placement agent for LS Power Equity Partners IV, while Magenta Capital Services helped the effort in the Middle East and Asia. Kirkland & Ellis served as legal advisor.

Bruno Alves contributed reporting to this story.