TPG Capital Said to Seek $1.25 Billion for Energy Fund

TPG Capital, the private-equity firm that’s among the investors in struggling power company Energy Future Holdings Corp., plans to seek $1.25 billion for its first dedicated energy fund, according to two people familiar with matter.

TPG Energy Production Partners will invest in producing oil and natural gas properties in North America, said the people, who asked not to be identified because the information is private. It will be led by TPG co-founder Jim Coulter, chief investment officer Jonathan Coslet, Michael MacDougall and Christopher Ortega, the people said.

TPG joins private-equity peers in seeking ways to benefit from the shale boom in the U.S. The firm’s biggest energy investment, the record-setting $48 billion buyout in 2007 of Energy Future, formerly known as TXU Corp., fell victim to the shale revolution, which pushed gas prices down and left the power company struggling to pay its bills. KKR & Co., which led the TXU deal with TPG, had raised $1.4 billion as of Sept. 30 for a debut fund that will invest in oil and gas development, according to its quarterly report.

Lisa Baker, a spokeswoman at Owen Blicksilver Public Relations, declined to comment on behalf of TPG.

MacDougall, who heads TPG’s global energy and natural resources investments, led the firm’s $1.5 billion equity investment in Energy Future Holdings, which is on the verge of bankruptcy.

The new fund won’t invest in electric power companies such as Energy Future, said one of the people. Thomas Hart III, who previously worked at El Paso Corp., and Dan Hughes will act as independent directors, the people said.

Maverick American

TPG Capital in November 2011 partnered with Hughes and Hart to form Maverick American Natural Gas, which acquires and operates natural gas producing properties in North America. The deal involved making Hughes chairman and chief executive and Hart president of the company.

TPG, which has made energy investments out of its main buyout funds until now, returned cash to investors from sales of three oil and gas-related assets last year. TPG made clients nine times their money on an investment in Northern Tier Energy LP, which went public and was later sold to Western Refining Inc., said one of the people. The firm sold Copano Energy LLC to Kinder Morgan Energy Partners LP for two times the amount invested, and sold part of its stake in Valerus Field Solutions to Kentz Corporation Ltd., at a price that values TPG’s investment at more than two times cost, said the person.

TPG will take 15 percent of the profit from the new fund after a 7 percent preferred return, or minimum annual gain for investors, said the people.

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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