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Energy-focused Arclight closes renewable energy continuation fund

HarbourVest Partners and GCM Grosvenor anchored the transaction, along with certain LPs from the existing fund.

Arclight Capital Partners has created its first continuation fund, focusing on renewable infrastructure.

The $9.6 billion AUM energy infrastructure firm closed Arclight Renewable Infrastructure Fund, according to a statement. GCM Grosvenor and HarbourVest Partners anchored the transaction and an undisclosed number of limited partners from the underlying fund rolled over their exposure.

The fund’s closing represents a commitment to ESG-compliant infrastructure, a strategic move in the energy transition landscape and eventually realised returns, according to the statement.

The fund took a 25 percent stake in an asset from the 2009-vintage flagship, Arclight Energy Partners V. That fund closed on $3.3 billion, according to PEI data.

The asset in the deal is Sidney Murray Hydroelectric Project, a run-of-river station adjacent to the Mississippi River in Concordia Parish, which the fund has owned since 2011.  Brookfield Asset Management affiliates are the majority equity owner of Sidney Murray, according to the statement.

The asset is a “world-class, baseload renewable energy resource selling power under long-term contracts to investment-grade counterparties”, said Dan Revers, founding partner of Arclight. There was more to do to optimise the asset, he added.

The firm has spent $4 billion on 16 renewable platforms since inception in 2001, according to the statement. Infrastructure secondaries scored $2.06 billion of volume in 2020, according to Setter Capital’s volume report.

This week, Chicago-headquartered Wind Point Partners completed a single-asset process to acquire a stake in chemicals producer Ascensus Specialties, led by Strategic Partners in a process first reported by Secondaries Investor. That interest was held in a 2018-vintage Wind Point-managed continuation fund.

Evercore and TD Securities USA served as financial advisers to ArcLight. Latham & Watkins and Ropes & Gray served as counsel to the sponsor.