First Reserve acquires energy unit for $1.2 bn

Industrial conglomerate Ingersoll Rand has agreed to sell one of its units to New York and London energy buyout specialist First Reserve.

First Reserve Corporation, the private equity energy specialist, has agreed to purchase Dresser-Rand from parent company Ingersoll Rand for $1.2 billion (€990 million).

New York-based Dresser-Rand builds infrastructure equipment for the oil and natural gas industries including turbines and compressors and reported revenues of $1.3 billion last year.

Commenting on the deal, chairman and chief executive officer William Macaulay said: “With higher prices, oil companies want to be as efficient as they can be. Oil companies historically did a lot of this work on their own, but as their work force starts to age, they need to outsource.”

The transaction is the latest in a series for Greenwich, Connecticut-headquartered First Reserve, which has spent over $2 billion in three transactions this year and has $4.7 billion in total under management.

In May, the firm was part of a consortium including The Blackstone Group that agreed to buy RAG American Coal Holding from Germany’s RAG Coal International for approximately $1 billion. The firm also bought a small well-testing operation from Halliburton for $129 million.

First Reserve closed its tenth fund dedicated to the energy sector on $2.3 billion in January and recently opened a London office. Macaulay said this would “accommodate the heavy [energy-related] deal flow coming out of Europe” in a recent interview with Private Equity International.