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TCW Spinout Is Said to Seek $4.25 Billion for Energy Fund

EIG Global Energy Partners LLC, the asset manager spun out from TCW Group Inc. in January 2011, plans to seek $4.25 billion for its next energy fund, according to two people with knowledge of the matter.

EIG Energy Fund XVI LP’s predecessor gathered $4.12 billion last year. The new fund will come to market in February and make mezzanine and private-equity investments in energy, infrastructure and natural resource businesses globally, said the people, who asked not to be identified because the information isn’t public. Mezzanine financing is a hybrid of debt and equity used by expanding companies.

Laurie Labuda, a spokeswoman at APCO Worldwide, declined to comment on behalf of EIG.

EIG Global Energy Partners, whose team has invested $14 billion since 1982, is formerly the energy and infrastructure group at TCW Group. As part of the EIG spinout agreement, TCW is entitled to a cut of profits from EIG funds until 2020, said one of the people. TCW gets one-third of the manager’s profit in Fund XV and will receive 20 percent in subsequent funds.

The new fund will invest with a significant allocation to North America, the person said. EIG has opened two offices in the past two years, in Hong Kong and Rio de Janeiro.

The prior fund, which is 68 percent invested, had distributed 11 percent of called capital as of the end of the third quarter, according to the person. It was producing a multiple of 1.25 capital and a 29 percent net internal rate of return.

Fund XIV, which closed at $2.6 billion in 2008, was generating a multiple of slightly more than 1.4 as of Sept. 30, said the person. The two latest funds have distributed a combined $2.1 billion in the past four years, the person said.

EIG is led by Blair Thomas, Kurt Talbot and Randall Wade. Thomas was chief executive of the energy group at TCW.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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