Energy Capital hits $800m hard-cap for mezz fund

The firm’s debut energy mezzanine fund had a $500m target and invests in energy companies similar to those in Energy Capital’s two private equity funds.

Energy Capital Partners has reached its $800 million hard-cap for its debut mezzanine fund, according to a source with knowledge of the situation.

Energy Capital Partners Mezzanine Opportunities Fund hit its $500 million target over the summer and continued the fundraising process through December 2012. The firm had completed active fundraising by the end of the year, the source said, but was waiting for one to two limited partners who were scheduled to commit to the fund in early 2013.

Energy Capital Partners declined to comment on the fundraise.

The fund will target between 10 and 15 investments of between $50 million and $75 million in energy companies similar to those in Energy Capital’s two private equity funds. The firm invests in energy assets related to power generation – including renewable energy facilities – electric transmission and oil and gas gathering, transportation and processing.

Energy Capital completed its first investment from its mezzanine fund last August, recapitalising frac sand producer Chieftain Sand and Proppant. Terms of the transaction were not disclosed, but Energy Capital reportedly invested $65 million to recapitalise Chieftain. The company owns and operates two plants in Wisconsin and Arkansas that produce sand for oil and gas extraction.

Energy Capital Partners is also investing its $4.3 billion second fund that closed in 2010. Last month, the firm took nuclear commercial services business EnergySoultions private in a transaction valued at $1.1 billion.

The Carlyle Group also is investing its first energy mezzanine fund, which closed in November on $1.38 billion. The fund targets investment opportunities in power-generation and oil and gas projects, primarily in North America. Carlyle Energy Mezzanine Opportunities Fund was launched in late 2010 with a $750 million target and no hard-cap.