LPs boost hard-cap on EIG fund to $4bn

EIG Energy Fund XV, which launched in February 2010, had ‘soft-circle commitments’ that exceeded the firm’s original hard-cap of $3.5bn. The firm’s original target was $2.5bn.

Limited partners approved raising the hard-cap on EIG Energy Fund XV to $4 billion from $3.5 billion in March, as the firm had “soft-circle commitments” that exceeded the original limit, according to documents from the Connecticut Retirement Plans and Trust Funds.

Connecticut is considering committing $50 million to the fund.

The Washington, DC-based firm launched its fifteenth fund, its first fund under the EIG banner, in February 2010 with a $2.5 billion target. The firm held a first close in June and expects to hold a final close in April or May.

The firm makes energy and energy-related infrastructure investments in up-stream and mid-stream oil and gas, power, renewable energy and infrastructure.

The fund is targeting a 1.8x to 2x return multiple and an internal rate of return, net of fees, of 13 to 16 percent, with 9 to 10 percent of that being comprised of current income.

The firm anticipates several factors as driving opportunities in energy infrastructure, including the growth of emerging markets and underinvestment in developed market infrastructure, according to documents from the pension.

Climate change is also driving investment opportunities, according to EIG.

The management fee on the fund is 1.25 percent during the commitment period and 1.25 percent of invested capital after. The firm will use 80 percent of transaction fees to offset the management fee for limited partners, according to pension documents. The GP is making a 1 percent contribution to the fund.

Credit Suisse is working as placement agent on the fundraising.

EIG signed its spin-out agreement with TCW, the Los Angeles-based asset manager, in October 2009, and completed the spin-out on 31 December 2010. The firm continues to share some economics with TCW, though that will fade out over time.