First Reserve’s deal war-chest expands

oilFirst Reserve is sitting on another $9 billion of spending money for energy deals after finishing raising its latest buyout fund, Fund XII. The private equity giant, which specialises in energy investments, said the fund is the largest ever raised in the energy sector and exceeds its previous fund, Fund XI, which raised $7.8 billion in 2006. 

The fund appears to be lower than target, however. London-based private equity intelligence firm Preqin said in a recent report that the fund had a $12 billion target.

“Energy remains a large, dynamic and complex industry where change creates new, attractive investment opportunities,” said William Macaulay, Chief Executive Officer of First Reserve in the press release (below).

Private equity firms have been struggling to raise new money for funds as the pension and endowment funds that invest in them have been hit by slides in the equity markets.

Some sectors and funds have been more successful than others. Secondary firms, which typically buy investors’ positions in buyout funds at a discount, have been particularly successful at raising capital.

GM navigates offshore roads

Chevrolet pickup trucks and SUVs are seen at a dealership in Silver Spring, MarylandGM has had a rough few weeks, with its share price racing down hill and increasingly frequent questions about solvency. So we note with interest the second sign in two days that the auto giant is looking to pump up its position in higher growth markets abroad. Russian car maker GAZ said today it plans to create a $1 billion joint venture with GM. The director of GAZ’s light vehicles unit, Leonid Dolgov, said the venture will produce around 300,000 cars per year, allowing the partners to compete with French rival Renault in Russia, Europe’s largest car market. Yesterday, a source told us Chinese pickup truck maker Hebei Zhongxing Automobile was in talks with GM and major Chinese automaker FAW Group to explore opportunities for cooperation, including possible equity ties. The source gave no specifics about Zhongxing’s discussions with GM, which runs two ventures with China’s top automaker, SAIC Motor, making cars and minivans. These are hardly high-gear moves, but could amount to welcome pay-offs if things in the U.S. continue to stall.

U.S. investment bank JP Morgan has held talks with potential partners about forming a consortium to break up British mortgage lender HBOS, The Daily Telegraph newspaper reported. National Australia Bank, named by the Telegraph as a potentially interested party, played down the report, while a UK industry source said HBOS had not received an approach. “We’re not sure this is a clever time to make acquisitions,” NAB Chief Executive John Stewart told reporters on Friday, shortly after NAB announced a further A$830 million ($798 million) in losses from its exposure to U.S. mortgages. Without naming a source, the Telegraph said JP Morgan had also approached private equity firms and may talk to Spain’s Banco Santander about a deal that would resemble the break up of ABN AMRO by a group of three banks last year.

The chief of U.S. hedge fund Harbinger Capital Partners, the largest shareholder of Cleveland-Cliffs, has begun pushing the iron ore pellet maker to put itself up for sale, The Wall Street Journal said. Phil Falcone, who wants Cleveland-Cliffs to take advantage of the steel boom, reckons the company could fetch as much as $130 a share, or about $14 billion, the paper said, citing a person close to Harbinger. The move comes a week after Cleveland-Cliffs said it agreed to acquire coal miner Alpha Natural Resources for about $8.3 billion to expand its coal assets and capitalize on the boom in the global steel industry. In a regulatory filing made after the deal announcement, Harbinger Capital, which owns about 18.36 percent of Cleveland-Cliffs common stock, expressed concerns about whether the Alpha deal was in the best interests of shareholders.