Tailwater Raises $1.1 Billion for New Energy- Infrastructure Bets

Tailwater Capital sees investment opportunities amid an oil-price slump prolonged by the coronavirus

By Luis Garcia
Updated March 26, 2020 7 00 am ET

Tailwater Capital has raised $1.1 billion for its latest energy-infrastructure fund as a coronavirus-driven oil-price slump could force sales of assets such as pipelines and oil-field gathering systems.

The Dallas-based private-equity firm closed its largest investment pool so far, Tailwater Energy Fund IV LP, in mid-February with about $970 million in capital and $130 million in co-investment commitments, said Jason Downie, a Tailwater co-founder and managing partner. About 100 investors backed the fund.

One such investor, the New York State Teachers’ Retirement System, pledged as much as $100 million, while California’s Sacramento County and Merced County public pensions committed$35 million and $5 million, respectively, organization documents and WSJ Pro Private Equity’s LP commitments database show.

Tailwater had set a fundraising target of $1 billion for the new vehicle, matching the amount collected for Tailwater Energy Fund III LP, which closed in 2018, said Edward Herring, Tailwater’s other co-founder and managing partner. The new fund’s upper limit was $1.1 billion.

Before the coronavirus outbreak, Tailwater benefited from an industry capital crunch that accelerated sales of noncore assets and the longer-term trend of transfers of pipeline, gathering system and other infrastructure operations to specialized providers, Mr. Herring said. “That was a source of deal flow that has been propelling some part of our investment strategy for the last 18 months.”

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