HM Capital in $149m exit

The Dallas-based private equity firm is exiting its remaining stake in Regency Energy Partners in a secondary public offering. It sold most of the midstream natural gas company to GE Financial Services last year.

US private equity firm HM Capital Partners is exiting its final stake in midstream natural gas company Regency Energy Partners via a secondary public offering valued at roughly $149 million (€105 million).

HM Capital will sell the remaining 7.1 million units it owns in Texas-based Regency for at a price of $21 per common unit. At press time, Regency was trading at $19.08, down from a 52-week high of $34.84.
Regency will not receive any proceeds from the sale.

HM Capital acquired Regency Gas Services for $405 million in 2004. making the investment from the firm’s $1.6 billion fifth buyout fund. At the time, it was still known as Hicks Muse Tate & First.  

After installing energy veterans James Hunt and Michael Williams as chief executive officer and chief operating officer, respectively, the firm sold a majority stake in a rebranded Regency to GE Financial Services for $603 million last year. HM Capital was thought to have made a significant return off the sale, as the firm had tripled Regency’s cash flow during its ownership.

Regency engages in the gathering, processing, contract compression, marketing and transportation of natural gas. The company has operations in Texas, Louisiana, Kansas and Oklahoma.  Regency was formed in 2003 by a group of energy industry operators backed by Boston-based buyout firm Charlesbank Capital Partners from assets previously owned by El Paso Energy and Duke Energy.

In July, HM Capital announced that it had closed its sixth fund on $780 million, short of its original $1 billion target. The firm is refocusing on its middle market roots after co-founder Tom Hicks left the firm in 2005.