* New fund to lend to energy projects and companies
* Targets 15-18 percent gross internal rate of return
By Greg Roumeliotis
NEW YORK, Nov 27 Carlyle Group LP has
raised $1.38 billion for a fund lending to energy projects and
companies, almost double its initial target, in its first
energy-focused fundraising effort following the end of its
collaboration with Riverstone Holdings LLC.
Vast reserves of natural gas and oil unlocked from
underground shale deposits are driving an energy renaissance in
the United States as companies scramble to raise money for
Since 2000, Washington, D.C.-based Carlyle and New
York-based Riverstone have launched six funds together, focused
on buyouts in the energy and power sectors, accumulating about
$15 billion in assets under management in total. But the two
private equity firms decided to go it alone in 2011.
Carlyle, which manages assets totaling $157.4 billion in a
wide range of alternative asset classes including buyouts, real
estate and hedge funds, said on Tuesday its new $1.38 billion
Carlyle Energy Mezzanine Opportunities Fund had exceeded its
initial $750 million fundraising target.
"We are delighted with the faith investors have shown in us
and in our strategy," David Albert, Carlyle's co-head of the
energy credit investment team, who was previously global head of
project and structured finance at Morgan Stanley, said in
The Carlyle Energy Mezzanine Opportunities Fund has made six
investments so far, including a rescue of Sunoco Inc's
Philadelphia refinery last July. It is targeting a 15 percent to
18 percent gross internal rate of return for investments in the
United States and Canada, according to Portfolio Advisors LLC,
an alternative investment advisory firm.
Carlyle is still considering its options for its first
energy buyout fund following the end of its collaboration with
Riverstone, although it has been making private equity
investments in the sector through its general buyout funds, its
infrastructure fund and its middle-market funds.
The oil and gas sector has attracted some of the largest
leveraged buyouts of the last 12 months, including the $7.2
billion acquisition of Samson Investment Co by a consortium led
by KKR & Co LP, and El Paso's $7.15 billion divestment
of assets to an Apollo Global Management LLC -led group.
Most diversified private equity firms now boast dedicated
energy funds. KKR said in June it had raised a $1.25 billion
natural resources fund, in addition to $350 million of capital
outside the fund for such investments. Blackstone Group LP
said in September it had raised just over $2.5 billion
for an energy-focused private equity fund.
Apollo had raised $915 million by the end of September for
its first natural resources fund and the firm said on Nov. 9 it
expected fundraising to be completed in the fourth quarter.
Historically, private equity investments in energy have
outperformed the general U.S. stock market, as well as pure
commodity returns strategies such as following the Goldman Sachs
Commodity Index and hedge funds investing in commodities, David
Foley, CEO of Blackstone Energy Partners, told a private equity
conference in Boston in June.
Carlyle's participation in energy investments has brought it
headaches in its recently announced takeover of Los
Angeles-based asset manager TCW. EIG Global Energy Partners LLC,
a rival energy-focused private equity firm that was spun off by
TCW in 2011, is seeking to block the deal in court on the basis
that Carlyle competes with EIG for energy investments and would
have access to sensitive EIG data following its takeover of TCW.
Carlyle raised $9.4 billion from investors for its funds
during the first nine months of 2012, 40 percent more than it
raised in the whole of 2011. Its latest North American buyout
fund, Carlyle Partners VI, has attracted $3.7 billion in
commitments and is on track to reach its $10 billion fundraising
target on schedule, the firm said on Nov. 8.