ARC Financial closes C$403m energy fund

The Canadian private investment firm’s fourth venture vehicle will focus on startup and early-stage energy companies.

Canada-based energy investor ARC Financial Corporation has announced the final close on its fourth private equity fund on C$403 million ($305 million, €246 million).

ARC Energy Venture Fund 4 will focus on startup and early-stage energy companies in Canada and abroad, according to a statement. The fund will specialise in conventional oil and gas exploration, production and related services, and will also invest in non-conventional hydrocarbon resources, infrastructure, electrical power generation and alternative energy technologies. The Calgary-based firm’s previous fund closed on C$310 million.

Over the last several decades, the Western Canadian Sedimentary Basin and the Canadian oil sands have been successful venues for incubating highly successful energy companies, especially oil and gas producers, ARC said in the statement. The firm has been investing in the energy sector since 1990, after its three founders in 1989 left investment bank Nesbitt Thomson (now owned by Canadian financial services conglomerate BMO Nesbitt Burns) to start what is now known as ARC Financial Group.

High energy prices, and deregulation and restructuring in the sector – as energy companies divest non-core assets – have led a number of private equity firms to raise standalone funds in the past year to capitalise on these opportunities.

At the end of June, Boston-based ArcLight Capital Partners closed its $1.6 billion Fund II to invest in the coal, natural gas, power generation, and electric and gas transmission and distribution industries. Houston-based Quantum Energy Partners in April announced a final close for its third fund, rounding up a total of $345.5 million. Earlier that same month, a new $1.1 billion fund to focus on the energy sector was launched by The Carlyle Group and Riverstone Holdings, and in February, Boston-based Energy Investors Funds Group (EIF Group) closed its $250 million United States Power Fund.