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Riverstone uses mammoth new fund to buy Utex from Rhone Capital

7 Mar 2013

UTEX sealsEnergy-focused private equity firm Riverstone Holdings has put the $7.5bn-targeting buyout fund it is raising to use by agreeing to buy Utex Industries from Rhone Capital.

Financial details for the deal were not disclosed, although a previous report by Reuters said the business could attract bids of between $700m and $800m.

The deal marks a quick turnaround for Rhone, which picked up 73-year-old oil and gas seal manufacturer Utex in December 2010.

KKR, First Reserve and Ares Management were all believed to be considering bids for the Texas-based business.

Riverstone said the offer, which is expected to close next month, was made in partnership with Utex management.

John Lancaster, a partner at Riverstone, said the investment was consistent with Riverstone’s prior investments in niche manufacturing companies providing engineered consumable products, with demand driven by increasing challenges of deeper, higher-pressure, and more service-intensive drilling and production operations.

Last month Riverstone received a $400m commitment from North America’s largest public pension fund, CalPERS, to bring it closer to the $7.5bn hard cap for its latest fund.

The energy-focused private equity firm is planning an imminent close of its Global Energy & Power Fund V thanks to strong interest from investors such as CalPERS, which had about $242bn under management at the end of October 2012.

Altassets learned in December that Riverstone was preparing to break through its original $6bn target for the vehicle and planned to continue fundraising until mid-February.

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