US private equity firm Energy Capital Partners has held an $805m final close for a mezzanine fund targeting deals in both fossil fuels and renewable power.
The firm said it had well-exceeded its $500m target, although SEC filings appear to show it closed $85m below its hard cap.
ECP began 2013 with a flurry of deals, buying nuclear waste management company EnergySolutions for $338.5m in cash and backing an $85m financing commitment for residential solar company Sungevity through this vehicle.
The firm’s Mezzanine Opportunities Fund was said to have been formed after ECP spotted a strong flow of attractive debt and preferred equity opportunities in the normal course of screening deals for its private equity vehicles.
It said these opportunities often require flexible junior capital but fit a risk-adjusted return profile that ECP believed was more appropriate for mezzanine funding than a typical private equity investment.
As well as fossil and renewable power generation the fund will target electric transmission, midstream oil and gas, energy efficiency, conservation and environmental and energy services.
ECP senior partner Doug Kimmelman, pictured, said, “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.
“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.”
Other green investments within the firm’s portfolio are CE2 Carbon Capital, which was formed to invest in carbon offsets and other assets focused on reducing greenhouse gas emissions in North America, and smart grid business Ice Energy Technologies.
ECP principal Nazar Massouh, who leads the firm’s mezzanine investment activities, said, “The enormous and accelerating capital needs of the energy industry are facing constrained capital availability from traditional sources caused by broad macroeconomic factors and the exit of European project finance banks and other lenders from the North American energy marketplace.
“This phenomenon is particularly true for middle market companies.
“Potential borrowers have shown a strong interest in our mezzanine funding solutions and we look forward to deploying this capital in a diversified portfolio of energy investments that meet our return criteria.”
The fund was raised through a number of separate entities according to SEC filings including Energy Capital Partners Mezzanine Opportunities A and B vehicles and an offshore feeder fund.
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