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ECP set to close on $1.6bn for Calpine continuation fund

Five years after the US power company's $17bn take-private, the energy-focused firm is rolling about 20% of the existing LPs into a single-asset vehicle.

Energy Capital Partners is set to close on a $1.6 billion continuation fund for US power company Calpine Corporation in the next couple of weeks, affiliate title Infrastructure Investor understands.

The New Jersey-based energy fund manager has been working with PJT Partners to raise the single-asset vehicle and will see 20 percent of the existing LP base roll over into the new fund, with Pantheon a lead investor. ECP’s ownership of Calpine has been held by both its 2013-vintage Energy Capital Partners III and 2017-vintage Energy Capital Partners IV vehicles.

ECP launched a take-private offer for Calpine in August 2017, leading a consortium of investors including Access Industries and Canada Pension Plan Investment Board. The offer comprised $5.5 billion of equity and $12 billion of debt. ECP was able to bring in $3.5 billion of co-investment capital to the bid and $2 billion of fund capital.

Calpine is the largest generator of electricity from natural gas and geothermal in the US, generating about 26GW across 76 plants in 22 states, with one under construction.

ECP is believed to have returned almost 100 percent of the invested capital through distributions during the period since the original deal closed in 2018. Through the continuation fund, ECP expects to sell down about 40 percent of its interest in Calpine.

It is thought to have pursued the continuation fund option in part due to the wealth of secondaries capital in market, as well as the size of the investment taking up a concentrated share in its funds.

It follows ECP’s move last April to raise $1.2 billion for a continuation fund to house its investment in US-based renewable energy operator Terra Gen, with Blackstone Strategic Partners the lead LP in the fund, as Infrastructure Investor noted.

ECP declined to comment on the fundraising.