Carlyle launches energy mezz fund

The Carlyle Group is setting its investment focus on mezzanine opportunities in the energy sector with the launch of a new fund.

The Carlyle Group has created its first dedicated energy-sector mezzanine fund, which is expected to target investment opportunities in power-generation and oil and gas projects, primarily in North America.

The launch of the Carlyle Energy Mezzanine Opportunities Fund comes at a time when many small and mid-sized companies in the sector are seeking to restructure in order to lower debt loads and to make themselves more attractive takeover targets as global M&A activity intensifies.

The newly formed, US-domiciled Carlyle Energy Mezzanine Opportunities Fund has an initial $73.5 million under management. Its offshore counterpart, the Cayman Islands-based Carlyle Energy Mezzanine Opportunities Fund-A, has an initial $85 million under management, according to 10 January filings with the US Securities and Exchange Commission.

The fund represents an extension of an existing investment strategy for the private equity giant, which manages $97.1 billion in assets. The fund will be overseen by the New York-based Carlyle Energy Mezzanine Opportunities team, which focuses on making credit and structured-debt investments in energy and power generation companies in the US and Canada.

The fund’s investment portfolio is managed by David Albert and Rahul Culas. Albert is a managing director of credit alternatives at Carlyle, and together with Culas, he co-heads the firm’s energy mezzanine opportunities group.

Regulatory filings reveal the minimum investment level for the US fund is set at $1.5 million, and its offshore counterpart has a minimum of $5 million.

The fund may also offer a mechanism for the firm to provide mezzanine financing for its existing portfolio companies in the energy sector.

Carlyle manages a number of energy-specific co-investment funds. Its most recent, the Carlyle Energy Coinvestment IV, was valued at $37.5 million, based on filings with the SEC.

Carlyle has also raised several energy-focused funds with Riverstone Holdings. The Riverstone/Carlyle Global Energy and Power IV fund raised $6 billion for its 2009 close. And its 2006 predecessor raised some $3.8 billion.