Starwood approaching $1.5bn hard-cap

The US firm’s latest vehicle is expected to close shortly before the possible return of ArcLight, another energy-focused firm, to the fundraising market.

Starwood Energy Group Global is nearing the $1.5 billion hard-cap of its latest infrastructure fund, Infrastructure Investor understands.

Launched last year, the vehicle had received at least $854 million as at 1 January 2017, as per a filing with the US Securities and Exchange Commission. It is expected to reach a final close by year-end, according to several sources with knowledge of the matter.

That would make Starwood Energy Infrastructure III larger than its two predecessors combined. Fund II, which closed in 2014 on $983 million, was already more than twice the size of Fund I, which closed on $433 million in 2008.

Starwood declined to comment.

Fund III’s LPs include the Oregon Public Employees Retirement Fund, which pledged $150 million in December. Previous investors in Starwood’s energy infrastructure funds have included the Texas-based RGK Foundation, Australia’s Future Fund and Loma Linda University.

The news comes at a time when a number of energy funds are currently on the road or considering a return to the market.

Ares Management, which bought Energy Investors Funds in January 2015, is seeking to raise $3 billion for a successor to the latter’s existing suite of vehicles.

On an earnings call in May, Michael Arougheti, president of Ares Management and co-founder of its parent group, said the firm was expecting to close Ares EIF Management V this quarter. He added that more than $800 million had been raised for the strategy since the EIF acquisition, including co-investment pledges.

ArcLight Capital Partners, another energy infrastructure stalwart, is likely to come back to the market to raise its seventh fund towards the beginning of next year, a source said. Its previous vehicle closed on $5.58 billion in 2015 after lifting its original hard-cap.

The firm had not responded to a request for comment at the time of publication.