Energy specialists First Reserve is acquiring a subset of electrical energy company Crompton Greaves’ international power transmission and distribution division, the firm said.
The investment is being made from First Reserve Fund XIII, a spokeswoman told Private Equity International.
First Reserve closed Fund XIII on $3.4 billion in September 2014, short of the $6 billion original target and the $5 billion reduced target, according to PEI data.
The fund was generating a net internal rate of return of -25.8 percent as of 30 September, according to the California Public Employees’ Retirement System. Investors in that fund include CalPERS, the California State Teachers’ Retirement System, Minnesota State Board of Investment, Virginia Retirement System, Washington State Investment Board, Hainan Zhenghe Industrial Group and The Helm Foundation, according to PEI Research & Analytics.
The Crompton Greaves unit manufactures transformers and switchgears, and is expected to be rebranded as Pauwels. It has operations in Europe, the US, Southeast Asia and the Middle East, together generating about €500 million in annual revenue, the firm said.
As part of this transaction, First Reserve is partnering with Pierre Bastid, former chairman and chief executive of power conversion equipment company Converteam, which was acquired by General Electric for $3.2 billion. Bastid said the highly fragmented industry presents an opportunity for consolidation to grow market share internationally.
“Pauwels represents an opportunity to invest in an energy subsector that is not directly exposed to the volatility of commodity pricing, providing what we believe is strong diversification for the First Reserve portfolio,” First Reserve managing director Francesco Giuliani said.
First Reserve has been investing in the power equipment manufacturing and services sector for over 30 years as a firm focused solely in energy. It has raised $31 billion in aggregate capital since its founding and has done more than 550 deals. It currently manages $17 billion in assets, according to PEI Research & Analytics.
Its current portfolio includes engineering and construction, operation and production services provider Abengoa, electrical infrastructure and automation services provider Dixie Electric and electric, gas and telecommunications utilities provider PrimeLine Utility Services, according to its website.
The spokeswoman declined to comment further on the financial details of the transaction.