Black Bay Partners Closes Third Fund At $425 Million

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Black Bay Partners, a private equity firm focused on the energy and industrial sectors, has closed its third fund, Black Bay III, L.P., at its $425 million hard cap, marking a significant increase from prior funds and reflecting strong investor interest. The fund targets strategic growth investments in innovative companies across the North American energy value chain, including oil & gas services, energy transition technologies, and adjacent chemical and industrial markets.

Black Bay Partners is a lower middle market private equity firm headquartered in New Orleans, with an additional office in New York City. Founded in 2016, the firm specializes in providing growth capital to high potential businesses in the energy industry and related sectors. It emphasizes innovative products and services that help reduce costs, enhance operations, and promote sustainability. The team, led by Managing Partner Michael LeBourgeois and Partners Tom Ambrose, Guy Cook, John Lancaster, and Matt Schovee, brings deep industry experience to identify and scale opportunities.

Black Bay III closed at $425 million, achieving its hard cap and demonstrating robust demand. This represents more than double the size of the firm’s second fund, closed in 2022. The fund has already made one platform investment, aligning with Black Bay’s strategy of building durable businesses through partnerships with leadership teams. Lazard Frères & Co. LLC served as the exclusive placement advisor, while Latham & Watkins LLP provided legal counsel.

The fund will continue Black Bay’s thematic approach, investing in companies that address key challenges in energy and industrials, such as efficiency and sustainability. With a strong pipeline identified, the firm aims to accelerate growth and enhance capabilities in portfolio companies. This closing occurs against a backdrop of declining overall private equity fundraising in 2025, but with signs of recovery in energy focused funds due to sector specific opportunities.

Black Bay Partners, established in 2016 as a dynamic player in the lower middle market private equity space, has built a reputation for strategic investments in the energy sector and adjacent industries. Initially operating under the name Black Bay Energy Capital, the firm has evolved to focus on growth capital for innovative businesses that drive efficiency, cost reduction, and sustainability across the North American energy value chain. This includes oil and gas services, energy transition technologies, chemical processing, and industrial equipment. With offices in New Orleans (headquartered at 1100 Poydras Street, Suite 1480) and New York City, Black Bay employs a team of eight professionals who leverage deep operational expertise to partner with management teams and scale operations.

The firm’s fund history demonstrates steady growth and investor confidence. Its inaugural fund, Black Bay Energy I, closed in July 2018 at $224 million, exceeding initial expectations and setting the stage for targeted investments in emerging energy technologies and services. This was followed by Black Bay Energy II in May 2022, which raised $210 million in an oversubscribed closing, surpassing its $200 million target and reflecting strong limited partner (LP) support amid post pandemic market volatility. The latest vehicle, Black Bay III, L.P., announced its final close at the hard cap of $425 million, more than doubling the size of Fund II and bringing cumulative capital commitments across the three funds to over $850 million. This milestone coincides with the firm’s 10 year anniversary, underscoring its maturation and ability to attract both returning LPs and new institutional investors.

The closing of Black Bay III highlights several key dynamics. It received broad backing, indicating sustained conviction in the firm’s sector specific expertise. Michael LeBourgeois, Managing Partner, noted, “Reaching our hard cap of $425 million on the 10 year anniversary of the firm is an exciting milestone, and we are deeply grateful for the confidence and support from our existing and new investors. Our team’s industry experience and operational focus position us to create value for our investors and all other stakeholders.” Partners Tom Ambrose, Guy Cook, John Lancaster, and Matt Schovee added, “We are extremely excited about the market opportunity ahead of us in the energy and industrial ecosystem. We see a robust pipeline of attractive investments for Fund III and look forward to partnering with portfolio company leadership teams to accelerate growth, enhance capabilities, and build durable, high performing businesses.” The process was supported by Lazard Frères & Co. LLC as the exclusive placement advisor and Latham & Watkins LLP (led by partner Edward D. Nelson) as legal counsel.

Black Bay’s investment strategy emphasizes platform builds and add-on acquisitions in high growth niches. To date, the firm has completed 19 investments, maintaining 11 active portfolio companies while achieving 4 exits. The portfolio reflects a focus on revenue generating businesses in areas like commercial products, business/productivity software, industrial chemicals, and machinery. Recent investments include Economy Control Systems (September 2025, other commercial products), Scope in Sugar Land (March 2025, business/productivity software with AI inspection capabilities), Enovate in Spring (October 2024, business/productivity software), Farha 4 Holdings (April 2024, industrial chemicals), and Capture Energy (February 2024, machinery B2B via PE growth/expansion). Earlier deals, such as the January 2024 acquisition of Process Technologies & Catalyst Business from Merichem Company and the May 2022 purchase of Advanced Industrial Devices from Rock Island Capital, illustrate the firm’s appetite for bolt-on strategies.

Exits demonstrate value creation: Piñon Midstream (October 2024), NexGen Chemical Technologies sold to Foremark Performance Chemicals (May 2023), Altitude Energy Partners (July 2022), and Total Operations and Production Services (TOPS) acquired by Apollo Global Management affiliates (June 2021). These outcomes align with Black Bay’s goal of building “durable, high performing businesses” through operational enhancements and strategic partnerships.

In the broader market context, Black Bay III’s successful close stands out amid a challenging environment for private equity fundraising. Global PE fundraising declined for the second consecutive year in 2025, with totals dropping due to economic pressures and valuation adjustments. However, the energy sector has shown resilience, with several notable fund closings in 2025 and early 2026. For instance, Kayne Anderson closed a $2.25 billion energy PE fund in May 2025, PGIM Energy Partners II at $619 million in August 2025, Energy Impact Partners Fund III at $1.36 billion in October 2025, and Carnelian’s Canada-focused fund at $600 million in October 2025. MKB’s third energy transition fund closed in December 2025, signaling growing interest in sustainable energy plays. Analysts anticipate a rebound in 2026, driven by improving deal flow, exit activity (with U.S. PE exits reaching 1,300 through October 2025), and adaptations to higher interest rates. Valuations may soften into 2026 as balance sheets face pressure, potentially creating more opportunities for firms like Black Bay.

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The following table summarizes Black Bay’s fund history:

This table illustrates the firm’s progression, with fund sizes increasing amid sector tailwinds.

Another table outlines select portfolio and exit activity:

These examples showcase Black Bay’s active dealmaking, with a blend of acquisitions, growth investments, and timely exits that generate returns for LPs.

Black Bay is well positioned to capitalize on energy sector trends, including the push toward sustainability and operational efficiency. The firm’s robust pipeline and thematic focus could yield further platform builds and add-ons, potentially leading to more exits in the coming years. As private equity adapts to 2026’s evolving landscape, marked by anticipated valuation declines and increased deal activity, Black Bay’s specialized approach may continue to attract capital and deliver value.

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