Kayne Anderson raises $ 2.25 billion for the third Energy Income Fund

Kayne Anderson announced that it has closed its third Energy Income Fund with $2.25 Billion of capital committed. This is far more than the initial target, as investors have shown renewed interest in oil and gas assets.

According to a Kayne Private Energy Income Fund III statement, the fund will invest in private companies that produce oil and gas from wells with stable cash flow.

This kind of production is suitable for income-focused strategies. Investors are paid a regular portion of earnings from an investment, in addition to the traditional private equity returns generated by assets increasing in value.

Mark Teshoian said that the third fundraise was successful, which originally targeted $1.5 billion. This validates the income-based strategy that the firm has followed over the past decade.

After a period of decline in the early part of this decade, investor interest has returned to oil and gas focused private equity. The industry's strong returns have contributed to the interest, and the regulatory pushback that dampened the attraction in the past has ebbed under the Trump administration.

Recent private equity funds raised by companies with strong track records in the oil and gas industry, like Kayne Anderson, have seen a recent influx of new funds.

According to a source familiar with the situation, Kayne's two first income funds and their associated co-investments had an IRR of around 24,4%. IRR is an important metric that helps to judge the profitability of private equity.

Danny Weingeist who is also the leader of Kayne Energy Private Equity said that both existing and new investors contributed to this third fund. The recent fundraising efforts raised more than $2.8billion, including co-investments.

According to a statement dated April 29, the third fund is already deploying capital. South Wind Exploration & Production has received $400 million in equity capital. South Wind's management team previously ran Flywheel Energy. The energy producer was backed by Kayne Anderson and sold last year.

Teshoian stated that Kayne's income strategies were well-suited for periods of volatility in the market, and that today's climate provided an attractive entry point for new investment.

Last week, U.S. crude oil prices reached a four-year-low amid fears over increased supply by the OPEC+ cartel and sluggish growth in global markets due to President Donald Trump's tariff war.

Although such conditions have caused executives of publicly-listed shale companies to cut their spending and output goals, income strategies that focus on maximizing existing production are less affected. (Reporting from David French in New York, editing by Sonali Paul.)

(source: Reuters)