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EnCap Investments Seeking $4.25 Billion for Energy Fund

EnCap Investments LP, the private-equity firm that has backed about 190 oil and gas companies since 1988, is seeking $4.25 billion for a new fund, according to a summary of terms obtained by Bloomberg News.

EnCap Energy Capital Fund IX LP will invest in so-called upstream companies, or those focusing on oil and gas exploration and production. The fund’s predecessor raised $3.6 billion in January 2011.

Charles Bauer, co-head of investor relations at Houston-based EnCap, declined to comment.

Private-equity firms including Riverstone Holdings LLC, First Reserve Corp. and Kayne Anderson Capital Advisors LP are raising funds aimed at profiting from growth in the energy industry. New York-based Riverstone and Greenwich, Connecticut-based First Reserve are both seeking about $6 billion. Kayne Anderson, based in Los Angeles, is targeting $1.6 billion after closing on about $1.1 billion in July.

EnCap plans to commit $200 million to $300 million per deal from its new fund to management teams that will acquire oil and gas reserves, the firm told clients in a cover letter. The fund will charge an annual management fee of 1.5 percent and 20 percent of net proceeds as carried interest, according to the summary of terms.

The prior fund, EnCap Energy Capital Fund VIII LP, has committed $3.3 billion to 19 companies and two more deals will close shortly, the firm told clients.

Fund Returns

Fund VIII, which started investing in November 2010, was generating a gross internal rate of return of 78 percent and a multiple of 1.5 times capital as of July 31, according to the summary of terms. Fund VII, which made its first investment in 2007, was producing a 33 percent rate of return and 1.7 times multiple.

EnCap Investments, which also has an office in Dallas, has managed 16 institutional funds. Its 143 realized deals have generated $11.2 billion, according to the client letter.

The investment team is led by David Miller, Gary Petersen, Martin Phillips and Robert Zorich.

The firm in July raised $1.79 billion for an energy infrastructure fund, which provides growth capital for midstream oil and gas industry deals. The fund is managed by a separate team of 12 investment professionals.

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