Energy Capital has held the final close of Energy Capital Partners Mezzanine Opportunities Fund at USD805m in total commitments, significantly exceeding the USD500m target.
The fund, which already has made two investments, was formed in response to the strong flow of attractive debt and preferred equity opportunities seen in the normal course of deal screening for the firm’s private equity vehicles.
These opportunities often require flexible junior capital but fit a risk-adjusted return profile that Energy Capital believes is more appropriate for a mezzanine funding solution than a typical equity investment by the firm’s private equity funds.
"This is an important milestone in Energy Capital’s history that broadens our role as a leading capital solutions provider to the energy industry by responding to a market opportunity to offer flexible funding alternatives via the mezzanine fund," says Doug Kimmelman, senior partner at Energy Capital Partners. "The macro environment, our strong origination network and our existing footprint across many energy industry subsectors continue to present a large number of attractive investment opportunities for the firm. We are grateful for the strong interest and support of our existing private equity investors and for the addition of several new investors and will continue to focus on delivering solid investment performance across all our funds."
The fund is targeting investments in debt and preferred equity across the entire energy value chain with a particular focus on fossil and renewable power generation, electric transmission, midstream oil and gas, energy efficiency and conservation, environmental and energy services.
The fund has made two senior secured loans to date, including the recapitalisation of Chieftain Sand and Proppant, a frac sand producer, and the project financing of a subsidiary of Sungevity, a distributed generation solar provider to the residential sector.
Kirkland & Ellis served as fund counsel and Park Hill Group acted as placement agent.
