Private Equity News & Analysis

Tenaska closes second US energy fund on $2.4bn

Exceeding the initial fundraising target by $900m, the Omaha-based private equity affiliate of energy producer Tenaska Energy will seek to invest the second fund across the same sectors as its first US energy fund, which closed on $838m in 2005.

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Tenaska Capital Management has closed its second US energy fund on $2.4 billion, exceeding its initial fundraising target by $900 million.

The Omaha-based private equity affiliate of energy producer Tenaska Energy had originally targeted $1.5 billion for the fund, which held its initial close in October 2007 on an undisclosed amount.

Power plant:
investment target

“Almost all of our investors from TPF I re-upped for TPF II. I think that speaks to the results of TPF I,” said Paul Smith, senior managing director of Tenaska Capital, told sister website www.infrastructureinvestor.com.

The firm's first fund, which closed on $838 million in 2005, invested primarily in power generation, natural gas storage, pipeline and other gas midstream projects. It was authorised to invest in renewables as well but did not make any renewables investments. The second fund also will be authorised to invest in renewable power generation sources, though it has not yet invested in any to date.

Smith said that TPF I is now fully committed and has already seen numerous liquidity events. TPF II will seek to replicate the strategy and success of TPF I, he added.

Aside from existing LPs, Smith said that TPF II also received “significant investment commitments from international entities”, located in Canada, Europe, Asia and Australia. The fund also attracted new capital from US-based LPs. The Massachusetts State Pension Fund committed $100 million to the fund as part of 11 commitments approved by the state's Pension Reserves Investment Management Board in June.

Smith said the core team that invested TPF I is still with the firm and will be investing TPF II. He added that the firm has plans to make new hires and has authorised several new positions that it will be seeking to fill.    

Since Tenaska Power Fund II began investing in October 2007, it has completed three investments and committed to a fourth totalling 2,900 megawatts of power generating capacity. Most recently, one of its portfolio companies announced the purchase of a 1,100 megawatt natural gas-fueled generating plant in Michigan.