News & Analysis

Infra manager ArcLight closes second continuation fund

The mid-market sustainable infrastructure investor's process around midstream infrastructure group Third Coast began with a first close on the CV in July.

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After closing its first continuation fund in July 2021, ArcLight Capital Partners has developed a taste for the structure.

The infrastructure manager last week said it had held the final close on its second such vehicle, ArcLight 3C SPV, with $407 million of commitments for midstream infrastructure group Third Coast.

The final close on ArcLight 3C follows an initial July 2022 close, during which the continuation fund acquired the remaining 25.1 percent of Third Coast from ArcLight Energy Partners Fund V. Subsequent closings have added firepower for follow-on growth opportunities, ArcLight said.

Third Coast was formed in 2019 when American Midstream merged with Fund V and subsequently changed its name to Third Coast. Its portfolio includes 1,200 miles of interstate and intrastate pipelines.

Fund V LPs as well as new investors – whose identities were not disclosed –  form the LP base of the latest continuation fund, according to a statement about the vehicle. This allowed Fund VI investors “the opportunity to either monetise their remaining interest in Third Coast or to continue to participate in the Third Coast business along with new identified expansion and growth opportunities”, ArcLight said.

“Third Coast provides a critical link in the domestic energy value chain connecting the prolific and low-carbon Gulf of Mexico production basin to Gulf Coast customers and markets,” Joe Alves, managing director at ArcLight, said in the statement.

ArcLight’s continuation vehicle is an example of a growing pocket of infrastructure capital. The infrastructure secondaries market grew in 2022, recording $7.7 billion in transactions, 57 percent of which were GP-leds, according to Evercore’s 2022 Secondary Market Synopsis.