Energy-focused private equity firm First Reserve Corporation, which has $20 billion of equity in its active buyout funds, has opened an office in Hong Kong and formed First Reserve Asia Limited. The PE firm’s investments in India include Kenersys, a Kalyani Group promoted wind turbine manufacturer, where it picked up a stake in 2008. First Reserve closed its latest fund in 2009 at approximately $9 billion.
“The development recognizes the growing importance of Asia to the energy industry”, said First Reserve, in a statement. It has appointed former Candover Asia head Jamie Paton as Managing Director to lead the effort. Allen Gu, who was a vice-president at Candover Asia, also joins the firm as a Director. Existing First Reserve investment professionals will also relocate to Hong Kong in the year ahead, added the statement.
“Energy demand and intensity continues to increase in Asia. We believe that the fastest rates of growth from urbanization and industrialization are in the emerging economies, and so the resources supplying those economies and the resulting need for energy services and infrastructure in these markets are of great interest to us and our portfolio companies,” said William E. Macaulay, Chairman and Chief Executive Officer of First Reserve Corporation.
2010 in India saw power utility firms dominate private equity dealmaking with 20% (of the overall PE dealflow) or deals worth $1.72 billion in the sector, according VCCEdge. The segment also saw the largest PE deal of year when a consortium led by Morgan Stanley Infrastructure Partners invested $425 million in Asian Genco. Global private equity major Blackstone has been the most active dealmaker in the sector with $360 million across two deals in the year.
Though opening its Asia office now, First Reserve has been actively closing investments in the region. Its current holdings include Singapore-based KrisEnergy, which is engaged in oil and gas exploration, development and production; Connect Resource Services, engaged in mining services in Australia and Mongolia; and others. First Reserve continues to hold a position in its pre-IPO deal in China Coal, the second largest coal company in China.
For 2011, First Reserve’s 30 portfolio companies are expected to have $208 billion in revenues and $15 billion of operating earnings (EBITDA).
Paton has over 20 years of experience in the industry having held senior positions at 3i and recently at Candover Asia, where he worked closely with Gu. Paton’s responsibilities include deal origination and structuring to due diligence, execution and monitoring, and include leadership of the Hong Kong office and business development in Asia. Before joining Candover, Paton was a Partner in 3i’s Global Growth Capital business, where he was responsible for 3i’s presence in North Asia and where he co-led 3i’s Asia program. Gu has worked with Morgan Stanley Private Equity Asia and Goldman Sachs before joining Candover.