01/13/2010

Energy-Buyout Team Aims for Splashy Debut

An energy-focused buyout shop is marketing its first fund, with an aggressive equity target.

Abatis Capital, whose leaders broke off from the now-dormant AllCapital a little more than a year ago, hopes to raise $1 billion for the vehicle. It would use the money to take equity stakes in power generation and transmission companies.

Benedetto, Gartland & Co. of New York is serving as placement agent.

Abatis is led by Stephen Daniel, Raymond Kwok and Richard Radini, all formerly executives at AllCapital. That New York investment operation had been a unit of Sydney-based Allco Finance, which was forced into receivership in late 2008 due to troubles stemming from the subprime-mortgage crisis.

As Allco's assets were liquidated, AllCapital's various personnel detached themselves from the operation and began scouting deals on their own. About a dozen ultimately followed Daniel, Kwok and Radini to Abatis, and the trio brought in some staffers from elsewhere as well.

The shop initially received some financial support from Deutsche Bank, perhaps in the form of a credit facility or seed capital that would give the bank a share of profits.

While the capital-raising goal for Abatis' fund is high for an inaugural vehicle, especially in today's tough capital-raising climate, market players say the New York firm's leaders boast solid pedigrees that could help attract investors. In addition to his work at AllCapital, for example, Daniel has handled buyout and financing work within Citigroup's investment-banking division. Kwok has an infrastructure background, partly with Macquarie Bank. And Radini has a long history working on energy projects, including a stint as president of advisory shop Sigma Energy.

It also helps that Abatis is looking at a wide range of plays within its targeted sector, including those involving alternative-energy assets such as solar or hydroelectric projects. Sources add that the team has carried out enough deals together to dispel at least some investor fears typically associated with first-time managers. The group's best-known deal was perhaps its 2007 purchase of a portfolio of U.S. power plants from Consolidated Edison.