ARC Financial launches C$850m fund

The Calgary, Canada-based firm is raising its seventh fund to target oil and gas exploration in Canada, a strategy the firm hopes will differentiate it from broader-based energy investors.

ARC Financial Corporation has launched its seventh fund targeting C$850 million (€607 million; $839 million) for investments in the Canadian oil and gas sector, according to a person with knowledge of the situation.

ARC, an energy focused private equity firm, did not return a request for comment. Atlantic-Pacific Capital is working as the placement agent for the fundraising.

ARC, which raised C$830 million for its sixth fund in 2008, focuses on companies that are involved in oil and gas exploration and production, known as the “upstream” market.   The firm has more than 45 people on its investment team, including engineers, geologists and geophysicists, the person said.

“They’re really operators,” the person said.

The firm wants to expand its base of limited partners and will be looking to attract capital from a more geographically diverse group of investors, the person said. ARC hopes to attract LPs by touting its expertise of the local market where it operates. Rather than having a broad energy focus, the firm works in Canada and knows the environment well, the person said.

The ARC team is lead by chief executive officer Kevin Brown and Lauchlan Currie, president. The firm's founders are Mac Van Wielingen, Phil Swift and John Stewart.

The firm will be entering a fundraising market that has been relatively friendly to energy investment vehicles.

Denham Capital is one of the most recent funds to find traction with LPs, closing on about $1.8 billion for its sixth fund, which is targeting $2.5 billion. Energy Investors Funds had collected $1.5 billion by May, on its way to a $1.75 billion target for power investments in the US.

ArcLight Capital Partners, which got off on a sluggish start for its fifth energy fund, had collected about $1.5 billion as of August. The fund had struggled to find support in the market after launching in 2009. This year, the firm partnered with China Investment Corporation and the Government of Singapore on an infrastructure joint venture, a strong pledge of support from some of the biggest investors in the market. Energy Investors Funds had collected $1.5 billion by May, on its way to a $1.75 billion target for power investments in the US.

Oil and gas exploration, specifically, has been a popular strategy for bigger, multi-strategy private equity firms, including Kohlberg Kravis Roberts and The Blackstone Group.