Private equity firm First Reserve Corporation has established an Asian arm in Hong Kong to tap deal-making and investment opportunities in a region of rising importance to the energy industry.
The company, which describes itself as the world’s leading energy industry PE firm with $20 billion of equity in active buyout funds, has named Jamie Paton to lead the effort as managing director of First Reserve Asia, based in Hong Kong.
His responsibilities range from deal origination and structuring to due diligence, execution and monitoring, and include leadership of the Hong Kong office and business development in Asia.
He will be supported by Allen Gu as director, while First Reserve says it will relocate an unspecified number of investment professionals to Hong Kong in the year ahead.
In response to AsianInvestor questions, a spokesman from the firm says Hong Kong “provides a strategic hub for local professionals to build and maintain strong long-term relationships with management teams, energy industry corporations and energy market participants in the region”.
However, the spokesman declines to answer questions about whether the firm is looking to raise an Asia-Pacific energy fund.
It has been reported that First Reserve is seeking $1.5 billion for its first infrastructure fund, and, if so, it’s sure to be targeting long-term opportunities in fast-growing developing markets in Asia.
First Reserve sees its move to Hong Kong as a strategic initiative “at a critical inflection point for Asian energy markets”.
The spokesman adds: “The fastest rates of growth from urbanisation and industrialisation are in the emerging economies, and so the resources supplying those economies and the resulting need for energy services and infrastructure in these markets are of great interest to us.”
China forecasts an urbanisation rate of 50% by 2015. While many of its larger cities have been modernised, 283 cities with a population of over 200,000 and 233 cities with a population of over 500,000 have yet to be upgraded and require huge investment in raw materials, notes Swiss private bank Sarasin in its latest research note.
First Reserve owns assets on six continents and has invested about $1.2 billion of equity in Asia over the past five years, according to reports. It is currently investing from its 12th buyout fund, which closed in 2009 at $9 billion.
The company says it sees Asian investment opportunities in equipment, manufacturing and service-related companies; power-related companies; energy reserves such as oil, natural gas and coal producers as well as uranium, iron ore and other minerals; renewable and alternative energy; and energy and insurance-related financial products.
Its current holdings include: Singapore-based KrisEnergy, which engages in oil and gas exploration, development and production; Pune-based Kenersys, a wind turbine manufacturer and marketer; and Brisbane-based companies, Connect Resource Services, which is engaged in mining services in Australia and Mongolia, and Southern Cross, which boasts extensive coal holdings in the region.
First Reserve continues to hold a position that it acquired pre-IPO in China Coal, the country’s second largest coal firm.
Prior to joining First Reserve, Paton was Asia head of Candover Investments, as well as a partner in 3i’s Global Growth Capital business. Gu, meanwhile, was a vice-president at Candover Asia, and has worked for Morgan Stanley Private Equity Asia and Goldman Sachs.