Pine Brook Road closes $1.4bn debut fund

The New York-based firm has said it will not use financial leverage to bolster returns. It has already done nine deals.

Pine Brook Road Partners has raised its debut fund with $1.4 billion in commitments.

It had been fundraising since mid-2007 and had a target of $1.5 billion, according to Howard Newman, chief executive officer of Pine Brook Road Partners.

The fund will make equity investments of $100 million to $200 million and will focus on the financial services and energy sectors.

The firm differs from traditional private equity firms in that its strategy calls for starting businesses instead of buying companies, investing equity to grow them and not using financial leverage to create returns. Pine Brook uses a “line of equity” structure that advances capital over time.

The firm was started by CEO Newman, who worked at Warburg Pincus for 22 years. Other managing principals include Arnold Chavkin, Joseph Gantz, Robert Glanville, Robert Jackowitz, Craig Jarchow, Michael McMahon and William Spiegel.

The firm’s investor base includes public and private pensions, wealthy families and “a number of people we’ve done business with in the past”, Newman said in an interview. Lazard Freres acted as placement agent for the fund.

Pine Brook sees a lot of opportunity in the financial services and energy sectors right now because the equity capital markets are closed, Newman said.

Even though the firm has a financial services focus, Pine Brook is not working with the US government on buying toxic assets from banks, Newman said. 

“We’ll take a look at it but we’re not focused on it at this time,” Newman said. “We’re more likely to help recapitalise the banking system than merely acquiring distressed assets.”

It has already made nine investments, some of which include start-up oil and gas exploration company Common Resources, Stonegate Production, an oil and gas company, and Aurigen Re Capital, a start-up life reinsurer.

Pine Brook Road in October 2007 led a consortium comprised of Singapore sovereign wealth fund Temasek, emerging markets buyout firm Actis Capital and global power company AES to buy a $380 million stake in oil and gas exploration company Asia Pacific Exploration Consolidated.