With the prospect of robust growth opportunities, Tailwater Capital moved portfolio company Producers Midstream II out of its 2019 fund and into a continuation vehicle with the goal of building on its midstream gas processing and transport business, according to people with knowledge of the deal.
The deal is among a wave of single-asset deals running through the private equity market amid an era of slower exits. It’s also one of the rarer energy assets to make use of secondaries as a way to extend holds and deliver liquidity to limited partners in an older fund.
In the first half, energy-related GP-led deals like continuation funds represented about 1 percent of the estimated $48 billion of GP-led activity, according to Campbell Lutyens’ first-half volume report. That was down from 2 percent in 2024, the report said.
Infrastructure deals, however, represented about 12 percent of first-half volume in GP-leds, the report found.
Tailwater, formed in 2013, has held Producers Midstream II in its fourth flagship fund, which it closed on $1.1 billion in 2020. (The final close included a co-investment for one of the fund’s portfolio companies.)The single-asset CV deal is led by Goldman Sachs Alternatives secondaries group, the people said. The CV raised $500 million, which includes a portion of fresh, “staple” capital the firm can use to make additional investments, the people said. Campbell Lutyens worked as secondaries adviser on the process. A Goldman Sachs spokesperson did not respond to a comment request, and a Campbell Lutyens spokesperson declined to comment.
Tailwater also is investing in the deal through its fifth flagship fund, which is in the market now fundraising, the people said. It’s not clear how much Fund V is targeting or how much it’s raised so far. A Tailwater spokesperson declined to comment.
Fund IV LPs had the chance to cash out of the business or roll into the CV under the new structure economics or retain their Fund IV terms, the people said.
Tailwater ran the deal, its first-ever CV, as a way to raise capital for additional investments, extend its hold over the asset and deliver liquidity to LPs in Fund IV. Producers Midstream II owns pipelines that transport natural gas that comes from wells into processing facilities, where the gas gets processed and then moved downstream to end users. The company owns around 3,300 miles of pipeline.
The company “is one of the best performing assets we have owned from a return standpoint, but as we sit here today, we have hundreds of millions of dollars of additional capital to invest in growth projects across the Producers Midstream II asset footprint,” said Stephen Lipscomb, partner at Tailwater.
Growth opportunities include building new processing plants and increasing capacity in New Mexico, which has seen the growth of oil drilling activity, Lipscomb said. “We’ll be using a lot of the capital to help build new processing plants and increasing capacity in Lea County [New Mexico],” he said.
Along with the CV, Producers Midstream II also expanded its credit facility with Texas Capital Bank to $600 million from $400 million, the people said.
Tailwater was formed by principal owners and managing partners Jason Downie and Edward Herring. It managed more than $6 billion as of October 2025, the firm said.