As crude oil prices reached record highs in March, First Reserve Corp. reportedly has begun raising a $12 billion fund to buy out energy assets, even as it inked several deals from an existing $7.8 billion fund.
The Greenwich private equity fund has revealed a small gusher of deals in the past several months, including the divestment of Ohmstede Ltd. to Norwalk-based Emcor Group Inc. for $455 million. Texas-based Ohmstede maintains massive heat exchangers used to cool equipment in oil and gas refineries.
While First Reserve is not the lone Fairfield County investment company to focus on energy ”“ it has done deals with Westport-based Lime Rock Partners, which itself raised a $750 million fund in 2006 ”“ First Reserve is capturing headlines with bets on what it considers undervalued assets in an overheated market.
First Reserve staked $667 million last month to launch PBF Partners, which in turn will invest the funds in U.S. oil refineries. PBF takes its name from the first letters of First Reserve and its syndicate partners: New York City-based Blackstone Group L.P. and Petroplus AG, a Zug, Switzerland-based company that operates five refineries in Europe.
On Feb.12, First Reserve announced it is buying out the Bahamas Oil Refining Co. BORCO”™s storage terminal in Freeport, Bahamas, is the largest in the Caribbean with 20 million barrels of capacity. First Reserve paid nearly $900 million for the terminal, according to seller Petróleos de Venezuela S.A.
The PBF and BORCO investments mark a reversal for First Reserve founder Bill MacAuley, who in 2006 told Forbes magazine that he was leery of investing in refineries, terminals and other infrastructure, much of it more than 25 years old.
A public relations firm representing First Reserve did not make MacAuley available for an interview.
MacAuley founded First Reserve in 1983, and in July 2006 raised nearly $8 billion for the firm”™s 11th fund, at the time purported to be the largest ever for energy buyouts.
The largest investor was the California State Teachers”™ Retirement System, also known as Calpers, which committed $500 million for investment by First Reserve.
Calpers had good reason for optimism ”“ First Reserve produced triple returns on $122 million Calpers invested through First Reserve in 2001, and the $125 million Calpers placed into the firm in 2004 is up by more than half.
As of this month, energy companies in First Reserve”™s portfolio employ 100,000 people and have $13 billion in annual revenue ”“ double that of Fairfield-based General Electric Co.”™s massive Oil & Gas division.
Managing the First Reserve empire are a staff of roughly 35 people at the company”™s Greenwich headquarters, along with a dozen in Houston and a smaller number still in London.
As companies like GE profit handsomely in the modern oil boom, First Reserve continues to look for bargains. On Feb. 22, it announced a $1.5 billion deal to acquire CHC Helicopter Corp., a western Canadian company whose drilling-rig fleet includes 110 helicopters produced by Stratford-based Sikorsky Aircraft Corp.
The company”™s investments run the gamut, encompassing services companies like CHC and the British rig operator Abbot Group plc; and companies involved with the production, distribution and risk management of coal, wind, uranium, and energy generated from landfill gases.
At deadline, First Reserve”™s latest investment was a $400 million deal buyout of the solar panel manufacturing arm of Spanish wind-turbine maker Gamesa Corporación Tecnológica S.A.
Perhaps to hedge its bets even further, the company has also invested in Blue Source L.L.C., a Utah company that trades emission reduction “offset” certificates to help companies comply with pollution regulations.
