Ara Partners, a Houston-based private equity and infrastructure firm with a focus on industrial decarbonization, said Dec. 13 that it had closed over $3 billion of new capital commitments.
The firm's Ara Fund III closed with $2.8 billion in limited partner commitments alongside limited partner co-investment vehicles. These commitments allowed the firm to beat its $2 billion target. Rede Partners acted as placement agent, and Debevoise & Plimpton LLP served as legal counsel in the formation of Fund III.
Ara Managing Partner Charles Cherington said global opportunities in industrial decarbonization has led to growing investor confidence in the fund’s strategy.
“The strong support from new and existing investors is a testament to their confidence in our talented team, our investment strategy, and the compelling opportunities in the industrial decarbonization sector,” Cherington said in a news release.
Fund III has already made four portfolio investments, with a focus on European companies. The fund has invested in Vacuumschmelze, a German producer of advanced magnetic materials; CFP Energy, a London-based renewable power solutions provider; Genera, a Tennessee-based producer of sustainable packaging; and CycleØ, a London-based developer of biomethane facilities.
Ara’s latest fund and investments follow the firm closing Ara Fund II in 2021 with over $1.1 billion in capital commitments. Ara Fund II was also oversubscribed — the fund’s initial target was $650 million — and it enabled Ara Partners to expand to Europe with an office in Dublin. The firm has approximately $5.6 billion assets under management.
"The growing, global presence of Ara's platform and portfolio directly reflects the industrial economy's continued demand for the technological innovation and infrastructure needed to decarbonize," Troy Thacker, managing partner of Ara Partners, said in the Dec. 13 release.
Fund III follows developments in Ara Partners’ local portfolio companies in the past year or so. Hydrogen and decarbonization technology company Utility Global opened new office space in the Energy Corridor earlier this year after completing a pilot test in 2022. Meanwhile, Houston-based Circulus Holdings PBLLC scored $300 million in financing in October 2022, three years after Ara began backing the company.
Thacker and Cherington founded Ara in 2017, and the firm has its local offices on the third floor of the Ion, a startup incubator in Houston’s Midtown neighborhood. Ara also has offices in Boston.
As energy investors and executives explore the best ways to decarbonize heavy industry through the use of alternative fuels and carbon capture, several Houston-based investors have made moves to establish themselves within the space. Bobby Tudor, the former chair of Tudor, Pickering and Holt Co., launched his new firm, Artemis Energy Partners, last year and made several investments this year. Meanwhile, his former business partner Maynard Holt's firm, Veriten, closed its first fund, called NexTen LP, with over $85 million in commitments and several portfolio companies, including Houston-based electric grid forecasting company Amperon.
Meanwhile, Houston-based Mercury closed its largest fund to date, with the industry-agnostic Mercury Fund V securing over $160 million in capital commitments. Fund V has already been used to invest in companies such as RepeatMD and Brassica Technologies this year.
