October 31, 2012: American Capital (ticker:ACAS) announced it’s intention to become an investment manager in the long term energy infrastructure space. This is another step away from the Company’s Business Development Company roots, and another step in becoming a multi-faceted alternative asset manager. We’d be surprised if the new business, notwithstanding the $200 million capital commitment by the parent, will either add or detract from earnings in the short term in any meaningful way, but this does underscore again that American Capital is in a very real way transforming it’s business. Here is most of the press release:
“American Capital Infrastructure plans to manage investments in global energy infrastructure assets, including power generation facilities, power distribution and transmission networks, energy transportation assets and fuel production opportunities. Joining Mr. Hanrahan are Rich Santoroski, Managing Director, and Rajeev Garside, Vice President. The creation of American Capital Infrastructure will expand American Capital’s energy investing efforts globally. To date, American Capital has invested $606 million in domestic mid-market oil field services and related companies led by Kevin Kuykendall out of its Dallas, TX office. These investments have produced excellent returns for American Capital shareholders.
“I am very pleased to join and head American Capital Infrastructure,” said Mr. Hanrahan. “Worldwide energy consumption is expected to increase substantially by 2030 and significant investment in energy infrastructure is required to satisfy this demand. This demand is driven by emerging markets experiencing robust economic growth, a rapid expansion of middle class populations and limited existing energy infrastructure. All of these factors create significant investment opportunities for American Capital Infrastructure and I am delighted that our team can lead American Capital into these targeted investments.
“We are delighted to welcome Paul, Rich and Rajeev, leading industry professionals with extensive experience in the global energy industry, to head American Capital Infrastructure,” said Malon Wilkus, American Capital Chairman and Chief Executive Officer. “The team’s background as both investors in and operators of energy infrastructure assets in high-growth and developed markets make them uniquely qualified to lead American Capital’s initiative into energy infrastructure investments. The team’s track record of managing and investing in energy infrastructure assets across the energy value chain during multiple stages of development is a tremendous advantage for the future development of American Capital Infrastructure.”
American Capital Infrastructure is part of American Capital’s asset management affiliate, American Capital, LLC. American Capital, LLC is dedicated to creating, capitalizing and managing alternative investment funds across asset classes, including real estate, private equity and private finance. American Capital has committed $200 million to support American Capital Infrastructure initiatives.
“The launch of American Capital Infrastructure is an important milestone for American Capital, LLC,” noted John Erickson, American Capital’s Chief Financial Officer. “We’ve already achieved significant success building American Capital’s asset management platform. We believe the addition of Paul Hanrahan and his team gives us the capability to continue this success.”
Mr. Hanrahan joins American Capital after serving as the President and CEO of The AES Corporation (AES) (“AES”), a Fortune 150 global power company, from 2002 through 2011. Under his leadership, AES generated total returns for stockholders over three times that of the S&P 500. Prior to assuming the CEO position at AES, Mr. Hanrahan was COO and Executive Vice President of AES and President and CEO of AES China Generating Co., Ltd. During his tenure at AES, Mr. Hanrahan was responsible for establishing operations in Europe, Asia, Latin America and the United States. He was directly involved in multiple acquisitions, expansions, and greenfield development of energy and natural resource businesses around the world ranging in size up to several billion dollars of enterprise value. Mr. Hanrahan currently serves on the boards of Arch Coal, Ingredion, Great Point Energy, LLC, and AquaVentures Holdings, LLC.