At a time when oil and natural gas companies are slamming the breaks on development from an ongoing price war, Tailwater Capital LLC on Thursday closed an energy fund with $1.1 billion in capital commitments that furthers its strategy to identify attractive midstream opportunities.
The $1.1 billion in capital, which included a co-investment for one of Tailwater Energy Fund IV LP’s platform companies, is to be used to employ a “disciplined and nimble approach” to investing, targeting opportunities across the midstream value chain, according to management of the private equity (PE) firm.
“Raising our largest fund to date in today’s energy environment is a testament to the strength of the Tailwater team and the longstanding trust our investors have placed in us to continue identifying attractive opportunities in the midstream sector, said co-founder Edward Herring.
With management teams operating in all of the core onshore basins in the United States, the Dallas-based PE is “poised to opportunistically execute on the buying opportunities created by the capital access issues in the energy industry.”
Co-founded by Herring and Jason Downie, both former partners at another PE, HM Capital Partners LLC, the Tailwater team has raised more than $3.7 billion across its funds and co-investments and executed more than 100 transactions representing more than $20 billion since its inception in 2013.
Most recently, Tailwater committed more than $500 million to produced water specialist Goodnight Midstream to help expand services. Goodnight, majority owned by PE firm TPG Capital, provides midstream water services to operators in the Permian Basin, as well as the Eagle Ford and Bakken shales.
“Having invested through multiple cycles, we are confident private equity will play a critical role in solving the prevailing capital constraints of the energy industry,” said Downie.
Tailwater’s prior fund, Tailwater Energy Fund III LP, closed in July 2018 with total commitments of $1 billion, including a co-investment for a platform company. Tailwater has committed capital to several other platform companies, including Houston-based Elevate Midstream Partners LLC in 2017 and Producers Midstream LP in 2016.