Orion opens Houston office to help invest energy infra credit fund

The firm is deploying an $816m fund that is focused on direct lending to mid-market energy and energy infrastructure companies.

After closing an $816 million energy infrastructure credit fund in February, Orion Energy Partners is opening a new office in Houston to pursue investment opportunities in the oil and gas-rich Gulf Coast region.

Orion, an energy-focused private equity firm based in New York, is opening a Houston office to focus investing the Orion Energy Credit Opportunities Fund II on assets in and around the Gulf Coast region, according to managing partner Ethan Shoemaker, who will run the new office. He told Infrastructure Investor the “biggest consumers of our capital” are in this region and that opening an office in Houston was “something that was always in the plan”.

He described Orion’s fund as a credit-focused vehicle that will invest primarily through direct lending to mid-market energy and energy infrastructure companies. The fund exceeded its $750 million target and drew half its commitments from US-based LPs, 20 percent from the UK and Europe and the rest from Australia. Orion began raising the fund at the end of 2015.

The fund is targeting the North American energy infrastructure sector, including midstream oil and gas, power and asset services, such as drill equipment rentals. Its gross return target ranges between 15 and 18 percent and 12 to 15 percent for net. Orion is looking for investments ranging between $25 million and $200 million.

Shoemaker said that over the past 18 months, Orion has committed nearly $500 million from Fund II and its predecessor to companies operating in the Houston and Gulf Coast region. The firm has agreed to 10 long-term funding partnerships in North America.

This is technically Orion’s first infrastructure debt fund, but the firm’s chief executive and co-founder, Nazar Massouh, raised a similar vehicle in 2013 for Energy Capital Partners, collecting $805 million.