EIF collects $1.5bn for fourth US power fund

Energy Investors Funds’ fourth US power fund is targeting $1.75bn and is expected to close this summer.

Energy Investors Funds (EIF), which focuses exclusively on power investments in the US, has collected $1.5 billion for its fourth fund on its way to its $1.75 billion target, according to a person with knowledge of the situation.

The fund is expected to close by early to mid-summer, the person said. EIF declined to comment.

Fund IV held a first close in June of last year, and had collected about $1 billion by the autumn. The firm is led by managing partners John Buehler, Terence Darby and Herbert Magid. Atlantic-Pacific Capital is working as placement agent for the firm.

The US power fund includes a “significant current yield component”, the person said, which makes it attractive to limited partners looking for hedges against inflation. The US power fund generally invests in power plants that have power purchase agreements with utilities at a fixed price to generate power. Once the contract is locked in, the power plant is paid whether it’s generating power or not, the person said.

“The utility continues to pay you the fixed cost just for you to be available,” the person said. “It’s a nice current income component that a lot of LPs have been attracted to in this environment.”

The firm, founded in 1987, closed its third fund on $1.35 billion in 2007. That fund was generating a gross return of 10.5 percent over the past year, according to information from the Contra Costa County Employees’ Retirement Association.

The firm earlier this year acquired Innovative Energy Systems, which owns and operates 11 landfill gas-to-energy projects in New York and Vermont. The company’s portfolio includes developed projects with installed capacity of 72 megawatts supplying over 42,000 homes with renewable energy.