Madison Dearborn plans to take aim at the power sector with its newly minted $6.5 billion investment vehicle Madison Dearborn Capital Partners V, L.P.Patrick Eilers, director at the Chicago-based private-equity firm, says the firm could invest as much as $800 million in equity in any one sector including power and energy.
Madison Dearborn could also form a new vehicle if the company’s concentration in the sector became too high. “The capital isn’t going to be the constraint,” he says, noting that it would not have a problem finding new investors. He declined to talk additional specifics about the fund including return expectations.
Eilers notes that Madison Dearborn and its partner U.S. Power Generating Co., which is headed by Jay Worenklein, would have liked to acquire recently auctioned Coleto Creek Power Station and East Coast Power, but that the winning bidders, a unit of International Power and GE Energy Financial Services, respectively, were in positions where they could rationalize a larger purchase price.
Madison Dearborn has already made one energy investment with the new fund. It recently bought a stake in UPC Wind Partners, a Newton, Mass.- based wind energy company.