Home Business Oil and gasoline investor EnCap raises $1.2 billion power transition fund By...

Oil and gasoline investor EnCap raises $1.2 billion power transition fund By Reuters


© Reuters. FILE PHOTO: Wind generators stand above the plains north of Amarillo, Texas, U.S., March 14, 2017. REUTERS/Lucas Jackson

By David French

(Reuters) – EnCap Investments mentioned on Tuesday it has closed a $1.2 billion fund devoted to investments within the burgeoning power transition house, the primary time the private-equity agency has raised cash particularly for clear power.

The Houston-based agency is a prolific investor in hydrocarbons, and has raised greater than $38 billion since its founding in 1988, with its newest flagship car amassing $7 billion in 2017.

With buyers extra targeted on environmental concerns, capital has been pouring into clear power manufacturing.

“There’s positively a motion amongst institutional buyers into ESG of all types, together with within the power house,” Jason DeLorenzo, EnCap Investments’ managing companion, informed Reuters.

EnCap had talked over a protracted time frame with its investor base about pursuing alternatives in power transition, he mentioned. Earlier EnCap buyers contributed round 75% of the brand new fund’s money.

EnCap Power Transition Fund I’ll put money into wind and solar energy and power storage, in accordance with an announcement. Will probably be run by Jim Hughes, a former chief government of First Photo voltaic Inc (NASDAQ:), who was a part of a quartet EnCap recruited in September 2019 to put money into renewable power.

The fund has already invested in 5 corporations, with Hughes saying in the identical interview that round half the proceeds have been deployed.

Hughes declined to offer a selected determine about return targets, however mentioned it will be decrease than EnCap’s upstream fund and above what infrastructure funds historically generate.

Non-public-equity companies usually pitch returns within the high-teens percentile, with the expectation for infrastructure funds within the excessive single digits.

EnCap shouldn’t be abandoning oil and gasoline altogether although, with DeLorenzo seeing “sturdy alternatives” accessible for deploying the remaining $4 billion of its eleventh flagship fund.

Portfolio corporations throughout the power transition fund may additionally assist EnCap’s present hydrocarbon-producing and pipeline investments with their very own decarbonization efforts, Hughes mentioned.

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