In 2001, ArcLight instituted an investment approach that takes advantage of industry fundamentals and protects against market risks. ArcLight invests across the entire energy industry value chain including coal, oil and gas production, midstream, power generation, gas and electric transmission and distribution as well as related service businesses. ArcLight bases its investments on fundamental asset values and execution of defined growth strategies with a focus on cash flow generating assets and service companies with conservative capital structures. The firm has consistently applied this philosophy and strategy by:
- Employing a diversified, non-directional approach to energy investing;
- Exploiting emerging trends, and identifying opportunities where others cannot;
- Investing in hard assets and service companies that produce significant cash flow;
- Optimizing underutilized assets to maximize returns;
- Pursuing private/public arbitrage opportunities;
- Mitigating exposure to commodity risk to create long-term, stable cash flows;
- Partnering with experienced operators and management teams to enhance value post-investment;
- Applying risk management and asset optimization techniques to capture incremental value and protect against downside risks; and
- Maximizing exit alternatives by pursuing non-traditional means to investment exits, limiting reliance on public markets.
ArcLight believes this approach allows it to identify unique value creation opportunities throughout the energy industry. These investments generate attractive rates of return through a combination of strong current income and long-term capital appreciation while providing significant downside protection and high visibility of investment returns.