Montana's state pension system has committed $20 million to ArcLight Capital Partners’ fifth energy fund, which is targeting $2 billion for North American energy infrastructure investments.
The $12.1 billion pension’s board of investments reviewed the commitment, made by investment staff, at its August meeting. Last week, Infrastructure Investor reported that the Connecticut Retirement Plans and Trust Fund, another pension scheme, was considering investing up to $50 million to ArcLight Energy Partners Fund V.
The fund has raised just over $1.5 billion, with $900 million in commitments received since May, according to US Securities and Exchange Commission filings. Fund V will primarily invest in power generation and utilities, midstream infrastructure and production.
The fund, which launched in 2009, struggled to generate commitments early on. Limited partners (LPs) attributed the initially weak support for Fund V to two factors: one was shifts in the firm’s investment strategy. The firm’s first two funds focused on high-risk, high-reward private equity style investments. Its third and fourth funds have relied on comparatively low-risk, low-reward infrastructure investments.
Sources also indicated that the rapid marketing of the firm’s prior funds had not given LPs the chance to judge performance. ArcLight had raised four funds totalling $4.65 billion between 2003 and 2007. ArcLight’s $2.1 billion fourth fund has generated a net internal rate of return of 9.7 percent with a 1.2x net multiple as of March 31, 2011, according to ArcLight presentation documents.
The firm was founded in 2001 by Daniel Revers and Robb Turner and manages $6.8 billion across its first four funds, according to its website.
Sam Sutton contributed reporting for this story.