Newspaper article International Herald Tribune

Riverstone Exceeds $6 Billion Fund Goal ; Fund-Raising Success Suggests Equity Firm Has Moved Past Pay Scandal

Newspaper article International Herald Tribune

Riverstone Exceeds $6 Billion Fund Goal ; Fund-Raising Success Suggests Equity Firm Has Moved Past Pay Scandal

Article excerpt

Four years after paying $50 million in fines for its role in a "pay-to-play" pension fund scheme, Riverstone said it had raised its largest fund ever, a $7.7 billion vehicle that exceeded its $6 billion goal.

Four years ago this month, the private equity firm Riverstone Holdings agreed to pay $30 million to resolve its role in a "pay-to- play" pension fund investigation by Andrew M. Cuomo, the New York attorney general at the time. Several months later, Riverstone's founder, David M. Leuschen, paid an additional $20 million to settle his role in the case.

"It is important that both firms and individuals be held accountable for conduct that jeopardized the integrity" of New York's state pension fund, Mr. Cuomo, now New York's governor, said at the time.

Mr. Cuomo's stern words, and the $50 million in payments, were a reputational blow to Riverstone. It seems, though, that the embarrassing episode and the penalties assessed against the firm and Mr. Leuschen have not affected its ability to raise money.

Riverstone announced Wednesday that it had raised its largest fund ever, a $7.7 billion vehicle that exceeded its $6 billion goal. The domestic oil-and-gas boom has created a sharp demand for energy investments, and Riverstone, one of the country's leading private equity firms focused on energy and power, has posted some of the sector's strongest returns.

The fund is Riverstone's first to be raised independently, without the Carlyle Group. It worked with Carlyle, the private equity giant, on its first six funds, which were co-branded Carlyle/ Riverstone or Riverstone/Carlyle.

Carlyle backed two former Goldman Sachs investment bankers, Mr. Leuschen and Pierre F. Lapeyre Jr., when they started Riverstone in 2000.

The joint venture had terrific success, but over time the relationship between the two firms cooled and then was further damaged by the pay-to-play pension fund scandal.

In 2007, Mr. Cuomo began investigating the millions of dollars and other favors that friends and aides of Alan G. Hevesi, the state comptroller and sole trustee of New York's pension fund, had received from several private equity firms. …

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