Prostar into Hong Kong, splits funds

The energy and energy infrastructure investor has opened a third office in Hong Kong and is dividing capital between US and Asia-Pacific strategies.

Prostar Capital, the Greenwich, Connecticut-based energy and energy infrastructure investment firm, has opened its third office worldwide in Hong Kong, after splitting its sponsor capital raised last year between two regional funds, Infrastructure Investor can reveal.

A Prostar spokeswoman told Infrastructure Investor that partner John Troy has been appointed as head of the new Hong Kong office. With more than 20 years’ infrastructure investment experience in Asia-Pacific, Troy will lead the firm’s investing and management efforts with a focus on northern Asia including China, Japan and South Korea.

The Hong Kong office will complement Prostar’s existing Asia-Pacific focused investment team based in Sydney. The firm is understood to have five professionals stationed in its Sydney office, along with two operating partners based in Singapore. The spokeswoman said that “given the attractive investment opportunities we are seeing for our Asia-Pacific energy infrastructure activities, we needed to get some more people on the ground”.

Prostar also confirmed that it recently completed its first investment, acquiring a strategic minority stake in an oil storage terminal being constructed in the Port of Fujairah in the United Arab Emirates, which has grown to become the world's second-largest bunkering port behind Singapore.

Prostar originally started talking to anchor investors in early 2012 before setting up any funds, though some reports stated that the firm was targeting $1 billion for opportunities worldwide, Infrastructure Investor reported earlier. In November 2012, the firm secured a $300 million commitment from a Korean institutional investor (reportedly SK Holdings in Korea). The firm then halted fundraising to focus on investment opportunities for seed assets.

Prostar declined to comment on fundraising when approached, but it is understood that the firm has chosen to split its global approach into two distinct niche funds to better suit investor appetite: one fund targeting US energy with more of a private equity model, and the second targeting Asia-Pacific energy infrastructure. Both funds are understood to have a target size of $750 million. $200 million of the Korean seed capital went to the US fund, while $100 million went to the Asia fund.

The Fujairah investment will act as a seed asset for the Asia-Pacific fund. It is understood that Prostar hopes to hold a first close on the fund in the first half of 2014, and is expecting to secure a seed asset for the US fund in Q1 2014. While the Asia fund has been launched, it is understood that Prostar is waiting to officially launch the US fund until after it secures a seed asset.

For the Asia fund, Prostar will be targeting midstream energy infrastructure assets, such as storage terminals and pipelines. The fund’s focus is on brownfield investments, seeking mostly to remarket storage space and improve the efficiency of operations. Understood to have a target IRR in the mid- to high-teens, Prostar is targeting institutional investors worldwide for both its funds, according to outside sources.