First Reserve targets $5bn for Fund XIII

The Greenwich, Connecticut-based energy investor has come to market with a much smaller fund than its previous vehicle, a sign of the challenging fundraising environment even for established managers.

First Reserve Corporation is targeting $5 billion for its Fund XIII, according to documents filed with the US Securities and Exchange Commission.  

The figure included in the filings may represent a revised target, as two sources who heard the original fund launch announcement last year previously told Private Equity International the firm would seek $6 billion. It is unclear whether Fund XIII has a hard-cap.

Greenwich, Connecticut-based First Reserve declined to comment. 

The energy investor’s latest fund is targeting slightly more than half the size of its previous fund, which collected $9 billion on a $12 billion target in 2009. Many firms have come to market with funds significantly lower than their predecessor vehicles recently, a testament to the increasingly challenging fundraising environment. 

Thomas H Lee Partners is targeting approximately $4 billion for its Fund VII, sources have told Private Equity International. If the firm hits its target, Fund VII will raise roughly half the capital collected by its Fund VI, which closed on $8.1 billion plus an additional $2 billion for co-investments.

Limited partners in First Reserve’s Fund XIII include the Washington State Investment Board, which committed up to $400 million to Fund XIII in 2012, according to pension documents. 

First Reserve’s 2009 vintage Fund XII was generating a 0.4 percent internal rate of return and a 1x multiple as of 30 September, according to the California Public Employees’ Retirement System, though its more mature Fund XI and Fund X are better indicators of performance. Fund XI, which collected $7.8 billion in 2006, was generating a negative 2.9 percent IRR and a 1.2x multiple, according to CalPERS. Fund X, a $2.3 billion 2004 vintage, has performed particularly well, producing a 31.6 percent IRR and a 1.8x multiple, CalPERS documents said.

First Reserve was founded in 1983 and has raised about $23.1 billion since inception. The firm last year closed its debut infrastructure fund on $1.2 billion.