Starwood raises more than $1.2bn for third fund

Starwood Energy Infrastructure Fund III, which had a $1.25bn target and a $1.5bn hard-cap, will invest in energy infrastructure projects in North America.

Starwood Energy Group Global has closed its third and largest infrastructure fund on more than $1.2 billion.

The Connecticut-based firm closed Starwood Energy Infrastructure Fund III after launching the investment vehicle in 2016 with a fundraising target of $1.25 billion and a hard-cap of $1.5 billion. Like Starwood’s previous funds, Fund III will invest in acquiring and developing power and transmission assets and other projects “in energy-constrained markets” in North America, according to a statement.

After the vehicle’s final close, a spokeswoman for the firm declined to clarify whether Fund III had reached its $1.25 billion target, or to comment further on the fund.

Starwood chief executive Himanshu Saxena said in a statement: “We are delighted and grateful for the strong support we have received from leading global energy and infrastructure investors and look forward to delivering value for them.”

Saxena was promoted to chief executive in November, the same month the firm announced it had acquired Ares Management’s stake in a 1.2GW portfolio of coal-fired power plants in the US. The firm did not comment on whether this investment was made from Fund III.

Starwood said in a statement at the time of its investment that the power plants are under availability-based power-purchase agreements and have “either a full pass-through or a market index-based reimbursement of fuel costs”. It added that these assets “comply with current and currently anticipated environmental regulations” and “do not have legacy environmental issues”.

Investors in the fund include pension and sovereign wealth funds, banking groups, insurance companies, fund of funds and family offices from North America, Europe and Asia Pacific, according to the statement. One known LP is the Oregon Public Employees Retirement Fund, which committed $150 million in December 2016.

The final close puts Starwood’s total equity commitments raised since the firm launched in 2005 at $3 billion, according to a statement. Starwood Energy Infrastructure Fund II closed on $983 million in 2014 and Fund I closed on $433 million.

Campbell Lutyens acted as placement agent for the fundraising and Kirkland & Ellis acted as legal counsel.