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A Review of North America-Based Natural Resources Investors – June 2016

by Matthew Bacco

  • 20 Jun 2016
  • NR

Preqin’s Natural Resources Online features detailed information on 1,178 natural resources investors based in North America, which have combined assets under management of $19.8tn. Natural resources investors based in North America make up the majority (62%) of the global natural resources investor population.

North America-based investors allocate an average of 3.9% of their total assets to the asset class, with the majority of investors targeting unlisted funds above other types of natural resources investment; 91% of investors gain exposure to natural resources through commitments to unlisted funds. On the other hand, 22% invest through listed funds and only 12% seek direct investment in assets. In terms of fund preferences, the majority (89%) of investors target unlisted energy vehicles, although notable proportions seek timberland (41%) and metals & mining funds (31%).

In terms of energy preferences, the vast majority (93%) of energy-focused investors will seek investments in oil & natural gas; approximately half will seek funds focused on renewable energy. Midstream is the most sought-after processing stage for energy investors, with 69% targeting this stage compared with 58% seeking upstream investment and 48% downstream.

Investors with a preference for metals & mining-focused funds have no specific preference for any one specific commodity: 81% have a preference for funds focused on precious metals, 76% for base metals, 75% invest in non-metallic minerals and 70% target ferrous metals. Similarly, 84% of investors choose to invest in the exploration stage and 72% invest in the refining stages. Agriculture/farmland investors are sector agnostic, with 77% of investors targeting annual/row, 76% perennial/permanent and 68% livestock.

The majority (92%) of North America-based natural resources investors prefer to invest domestically. Approximately half (47%) also invest on a global scale; 34% invest in Europe, 29% in Asia and 23% in emerging markets. Only 4% invest in Africa and only 9% invest in Latin America.

One North America-based investor, California Public Employees' Retirement System, plans to make additional natural resources commitments in 2016. The public pension fund will commit between $10mn and $20mn to one or two unlisted energy or agriculture funds. Of all of the investors with active natural resources fund searches and mandates, 44% are based in North America, suggesting the potential for substantial capital inflows in future.

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