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EnCap closes oversubscribed ninth fund at $5bn hard cap

4 Feb 2013

oil_170sq EnCap Investments has surged to a $5bn final close on its ninth fund, which the energy-focused private equity said was “significantly oversubscribed” by investors.

The firm had set a $4.25bn target for the EnCap Energy Capital Fund IX and raced to a swift first close of $4bn in early January, AltAssets revealed at the time.

Texas-based Encap, a major oil and gas investor which also has interests in carbon capture, has managed about $18bn of capital commitments from 300 institutional investors since it was founded in 1988.

Investor interest in energy funds rocketed in 2012 as limited partners sought to profit from the burgeoning US shale gas market.

Robert Zorich, one of EnCap’s managing partners, said, “Our existing investors’ strong support of Fund IX resulted in a very quick and very successful fundraise.

“We’ve had the good fortune now of having our last three funds heavily oversubscribed, and we couldn’t have done it without the longstanding relationships we have with so many highly respected limited partners.”

EnCap’s attractiveness also stemmed from the performance of the vehicle’s predecessor, which was running at an IRR of 79.05 per cent at the end of March 2012, according to public disclosures from California pension fund CalSTRS.

Fund VIII closed with commitments of $3.5bn in 2010, and came hot on the heels of a $2.5bn fund in 2007 and a $1.5bn vehicle in 2006.

Those two funds were also performing well at the end of March, with IRRs of 24.55 per cent and 27.59 per cent respectively, according to CalSTRS.

AltAssets revealed at the beginning of December that EnCap was ready to hold a hefty first close after becoming heavily oversubscribed by LPs.

Institutional investors committing to the new fund include the New Mexico State Investment Council, which agreed to part with $75m, and the Maine Public Employees’ Retirement System, which committed $30m.

The Arkansas Teacher Retirement System agreed to hand over $25m while the Employees’ Retirement System of Rhode Island committed $20m.

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