Comprehensive Guide to Lower Middle Market Private Equity Firms in Industrials and Energy Transition

Top 25 U.S. PE Firms Driving Growth in Industrials, Manufacturing, and Renewable Energy

Key Takeaways

Diverse Expertise: Firms specialize in various sectors including industrials, energy transition, manufacturing, and renewables.
Strategic Investments: Emphasis on operational improvements, sustainability, and long-term growth.
Robust Portfolio: Significant assets under management with recent fundraisings indicating strong market confidence.

Top 25 Lower Middle Market Private Equity Firms

1. Ara Partners

Website: https://arapartners.com

Headquarters: Houston, TX

Latest Fund Raised: $1.1 billion (Ara Fund II, 2022)

Employees: Approximately 50

Assets Under Management (AUM): $3 billion

Established: 2017

Strategy: Focuses on industrial decarbonization, energy efficiency, and sustainable materials. Committed to ESG and sustainability.

Considerations: Dedicated Chief Decarbonization Officer to oversee sustainable initiatives.

2. Generate Capital

Website: https://generatecapital.com

Headquarters: San Francisco, CA

Latest Fund Raised: $2 billion (2023)

Employees: Approximately 200

Assets Under Management (AUM): $10 billion

Established: 2014

Strategy: Invests in sustainable infrastructure including renewable energy, energy efficiency, and water/waste solutions.

Considerations: Known for providing long-term, patient capital to portfolio companies.

3. EnCap Investments

Website: https://www.encapinvestments.com

Headquarters: Houston, TX

Latest Fund Raised: $1.2 billion (EnCap Energy Transition Fund I, 2022)

Employees: Approximately 100

Assets Under Management (AUM): $38 billion

Established: 1988

Strategy: Focuses on both traditional energy and energy transition sectors, expanding into renewables and decarbonization.

Considerations: Strong track record with a balanced approach to traditional and renewable energy investments.

4. Blue Wolf Capital Partners

Website: https://www.bluewolfcapital.com

Headquarters: New York, NY

Latest Fund Raised: $600 million (Blue Wolf Capital Fund V, 2021)

Employees: Approximately 30

Assets Under Management (AUM): $2 billion

Established: 2005

Strategy: Specializes in industrials, manufacturing, and infrastructure with a strong operational focus to drive portfolio company growth.

Considerations: Emphasizes hands-on operational improvements within portfolio companies.

5. Crestline Investors

Website: https://www.crestlineinvestors.com

Headquarters: Fort Worth, TX

Latest Fund Raised: $1.1 billion (Crestline Opportunistic Credit Fund, 2023)

Employees: Approximately 150

Assets Under Management (AUM): $12 billion

Established: 1997

Strategy: Invests in energy, industrials, and infrastructure through both credit and equity investments.

Considerations: Strong focus on leveraging credit to enhance investment outcomes.

6. HarbourVest Partners

Website: https://www.harbourvest.com

Headquarters: Boston, MA

Latest Fund Raised: $1.5 billion (HarbourVest Fund XII, 2023)

Employees: Approximately 500

Assets Under Management (AUM): $100 billion

Established: 1982

Strategy: Focuses on secondary investments in energy and industrials, with a global reach and strong US presence.

Considerations: Extensive experience in secondary market transactions.

7. Energy Capital Partners (ECP)

Website: https://www.ecpartners.com

Headquarters: Short Hills, NJ

Latest Fund Raised: $4.4 billion (Energy Capital Partners V, 2022)

Employees: Approximately 50

Assets Under Management (AUM): $20 billion

Established: 2005

Strategy: Invests in energy transition, renewables, and infrastructure, focusing on critical energy infrastructure.

Considerations: Strong track record in energy investments and sustainability projects.

8. First Reserve

Website: https://www.firstreserve.com

Headquarters: Houston, TX

Latest Fund Raised: $1.8 billion (First Reserve Sustainable Growth Fund, 2023)

Employees: Approximately 40

Assets Under Management (AUM): $15 billion

Established: 1983

Strategy: Focuses on energy transition and sustainable infrastructure, leveraging long history in energy investments.

Considerations: Emphasis on partnering with management to drive growth and sustainability.

9. ArcLight Capital Partners

Website: https://www.arclight.com

Headquarters: Boston, MA

Latest Fund Raised: $3.4 billion (ArcLight Energy Partners Fund VII, 2022)

Employees: Approximately 60

Assets Under Management (AUM): $25 billion

Established: 2001

Strategy: Invests in energy infrastructure and renewables, with a strong focus on midstream energy assets.

Considerations: Comprehensive approach to energy investments encompassing various stages of the energy value chain.

10. Quantum Energy Partners

Website: https://www.quantumep.com

Headquarters: Houston, TX

Latest Fund Raised: $1.7 billion (Quantum Energy Partners Fund IX, 2023)

Employees: Approximately 50

Assets Under Management (AUM): $18 billion

Established: 1998

Strategy: Focuses on traditional energy and energy transition sectors, leveraging strong operational expertise.

Considerations: Integrated approach combining traditional and renewable energy investments.

11. HPS Investment Partners

Website: https://www.hpspartners.com

Headquarters: New York, NY

Latest Fund Raised: $2.5 billion (HPS Strategic Investment Fund, 2023)

Employees: Approximately 300

Assets Under Management (AUM): $80 billion

Established: 2007

Strategy: Invests in energy, industrials, and infrastructure with strong credit and equity capabilities.

Considerations: Extensive resources allow for diversified investment strategies and robust portfolio management.

12. Kayne Anderson Capital Advisors

Website: https://www.kayneanderson.com

Headquarters: Los Angeles, CA

Latest Fund Raised: $1.3 billion (Kayne Energy Fund, 2023)

Employees: Approximately 100

Assets Under Management (AUM): $30 billion

Established: 1984

Strategy: Focuses on energy infrastructure and renewables, particularly midstream and renewable energy projects.

Considerations: Strong emphasis on sustainable energy solutions and infrastructure development.

13. Riverstone Holdings

Website: https://www.riverstonellc.com

Headquarters: New York, NY

Latest Fund Raised: $2.5 billion (Riverstone Energy Fund VI, 2022)

Employees: Approximately 50

Assets Under Management (AUM): $40 billion

Established: 2000

Strategy: Focuses on energy and renewables, leveraging a strong global presence.

Considerations: Extensive network and expertise in global energy markets.

14. Tailwater Capital

Website: https://www.tailwatercapital.com

Headquarters: Dallas, TX

Latest Fund Raised: $1.2 billion (Tailwater Energy Fund IV, 2023)

Employees: Approximately 30

Assets Under Management (AUM): $5 billion

Established: 2013

Strategy: Invests in energy infrastructure and renewables with a strong operational focus to enhance portfolio company performance.

Considerations: Emphasis on operational excellence and strategic growth initiatives.

15. Post Road Group

Website: https://www.postroadgroup.com

Headquarters: Stamford, CT

Latest Fund Raised: $500 million (Post Road Fund II, 2022)

Employees: Approximately 20

Assets Under Management (AUM): $1.5 billion

Established: 2016

Strategy: Focuses on industrials and manufacturing within the lower middle market, emphasizing operational improvements and growth.

Considerations: Strong focus on partnering with management teams to drive performance.

16. Rockwood Equity Partners

Website: https://www.rockwoodequity.com/

Headquarters: Cleveland, OH

Latest Fund Raised: Fund details not specified

Employees: Approximately 20-50

Assets Under Management (AUM): Not disclosed

Established: 1999

Strategy: Focuses on lower middle market industrials, manufacturing, and business services with an emphasis on management partnership and operational improvement.

Considerations: Specializes in nurturing growth through strategic operational enhancements.

17. CORE Industrial Partners

Website: https://coreipfund.com/

Headquarters: Chicago, IL

Latest Fund Raised: CORE Industrial Fund II ($670 million, closed in 2022)

Employees: Approximately 20-50

Assets Under Management (AUM): Over $1.58 billion

Established: 2016

Strategy: Acquires and builds lower middle market industrial and manufacturing companies with revenues between $20 million to $250 million.

Considerations: Focuses on scalable growth and operational excellence.

18. ASGARD Partners & Co.

Website: https://www.asgardpartners.com/

Headquarters: New York, NY

Latest Fund Raised: Not disclosed

Employees: Approximately 20-50

Assets Under Management (AUM): Not disclosed

Established: 2016

Strategy: Invests in industrial services, niche manufacturing, and value-added distribution businesses, targeting performance improvement and growth.

Considerations: Emphasizes strategic partnerships and value creation through operational enhancements.

19. Black Bay Energy Capital

Website: https://blackbaypartners.com/

Headquarters: New Orleans, LA

Latest Fund Raised: Black Bay Energy II ($200 million, closed in 2022)

Employees: Approximately 10-30

Assets Under Management (AUM): Not disclosed

Established: 2015

Strategy: Specializes in energy, energy transition, and related chemical industries with a focus on growth capital investments.

Considerations: Prioritizes growth-oriented investments in sustainable energy sectors.

20. New Water Capital

Website: https://www.newwatercap.com/

Headquarters: Boca Raton, FL

Latest Fund Raised: Fund II ($406 million, closed in 2021)

Employees: Approximately 20-50

Assets Under Management (AUM): Not disclosed

Established: 2014

Strategy: Targets lower middle market industrial manufacturing and services companies with revenues between $30 million and $300 million.

Considerations: Focuses on scalable business models and operational improvements.

21. HCI Equity Partners

Website: https://www.hciequity.com/

Headquarters: Washington, D.C.; Minneapolis, MN

Latest Fund Raised: Fund IV ($400 million, closed in 2020)

Employees: Approximately 50-75

Assets Under Management (AUM): Approximately $1 billion

Established: 2005

Strategy: Invests in lower middle market transportation and logistics, industrial services, and distribution companies, prioritizing operational expertise.

Considerations: Senior team members have CEO/President/CFO experience in industrial businesses, enhancing strategic guidance.

22. Turnbridge Capital

Website: https://www.turnbridgecapital.com/

Headquarters: Dallas, TX

Latest Fund Raised: Not disclosed

Employees: Approximately 10-30

Assets Under Management (AUM): Not disclosed

Established: 2008

Strategy: Focuses on middle market service providers and equipment manufacturers in energy, energy transition, and infrastructure.

Considerations: Emphasizes strategic growth and operational improvements within portfolio companies.

23. Renovo Capital

Website: https://www.renovocapital.com/

Headquarters: Dallas, TX; Denver, CO

Latest Fund Raised: Renovo Capital Fund III ($225 million, closed in 2021)

Employees: Approximately 10-30

Assets Under Management (AUM): Not disclosed

Established: 2009

Strategy: Invests in underperforming technical manufacturing and industrial businesses to unlock value through operational improvement.

Considerations: Focuses on revitalizing distressed assets through strategic and operational interventions.

24. TruArc Partners

Website: https://truarcpartners.com/

Headquarters: New York, NY

Latest Fund Raised: Not disclosed

Employees: Approximately 20-50

Assets Under Management (AUM): $3.3 billion (team total investment history)

Established: 2021

Strategy: Focuses on specialty manufacturing and business services for transformation and growth within the lower middle market.

Considerations: Leveraging industry expertise to drive operational efficiencies and market expansion.

25. Salt Creek Capital

Website: https://www.saltcreekcap.com/

Headquarters: Woodside, CA

Latest Fund Raised: Fund IV ($275 million, closed in 2019)

Employees: Approximately 10-30

Assets Under Management (AUM): Not disclosed

Established: 2009

Strategy: Targets niche manufacturing and industrial service businesses, specializing in management transitions and performance improvement.

Considerations: Focuses on seamless transitions and enhancing operational performance within portfolio companies.

16. Monomoy Capital Partners

Website: https://www.mcpfunds.com/

Headquarters: New York, NY

Latest Fund Raised: Monomoy Fund IV ($1.4 billion, closed in 2022)

Employees: Approximately 50-100

Assets Under Management (AUM): Over $3 billion

Established: 2005

Strategy: Invests in manufacturing and industrial companies, often focusing on underperforming or distressed assets to drive value creation.

Considerations: Utilizes deep industry expertise to revitalize and grow portfolio companies.

17. Summer Street Capital

Website: https://www.summerstreetcapital.com/

Headquarters: Buffalo, NY

Latest Fund Raised: Not disclosed

Employees: Approximately 10-25

Assets Under Management (AUM): Not disclosed

Established: 1999

Strategy: Focuses on environmental services, niche manufacturing, and green industries with a sustainable approach.

Considerations: Emphasizes investments that align with environmental sustainability and responsible growth.

Conclusion

The landscape of lower middle market private equity firms in the United States is vibrant and diverse, particularly within the sectors of industrials, energy transition, manufacturing, and renewables. These firms not only provide essential capital for growth and expansion but also bring strategic operational expertise to drive long-term value creation. Their focused investment strategies, coupled with strong emphasis on sustainability and ESG principles, position them as pivotal players in shaping the future of these critical industries.

References

For further information or detailed inquiries about any of the firms listed above, please visit their respective websites.