Energy Capital digs into natural gas, renewables

The firm has agreed three deals since ending negotiations in July with The Carlyle Group, which had expressed interest in purchasing the energy-focused firm.

Energy Capital Partners has agreed its third acquisition in the past two months, purchasing a 100 percent stake in Liberty Electric from Strategic Value Partners. Financial details of the transaction were not disclosed.
Liberty Electric, which generated $73.7 million in earnings before interest, tax, depreciation and amortisation last year, owns a 575 megawatt natural gas-fired power plant in Pennsylvania. The company faced “severe operational and financial challenges” under a heavy debt load when SVP purchased the company in 2006, at which time Liberty’s EBITDA stood at $5.6 million.
Energy Capital’s investment in the natural gas power company comes following two transactions in July: the formation of Centennial Renewable Power, into which Energy Capital is seeking to invest $250 million over the next three years, and a $101 million investment in CoaLogix, which reduces combustion-related gasses for coal-fired power plants.

The firm's current portfolio contains several clean energy and natural gas assets. Energy Capital's $4.3 billion second fund, which focuses on infrastructure assets in the fossil fuel generation, renewable power generation, electric transmission and midstream gas sectors, closed last year and is approximately 33 percent invested as of 1 September, according to a source with knowledge of the situation.
All three of the firm's recent deals come following negotiations with The Carlyle Group, which was interested in purchasing Energy Capital, that ended without an agreement, a source familiar with the situation told Private Equity International in July. The “presumption” was the two sides will not engage in further discussions, the source said.
Energy funds have been popular with limited partners as of late. In May, EIG Global Energy Partners closed its first fund since completing its spinout from Los Angeles-based asset manager TCW in December 2010. The final close amount of $4.1 billion exceeded both the fund’s original target of $2.5 billion and the original hard cap of $3.5 billion.