Energy-Focused Private Equity Fundraising – June 2014

by Kamarl Simpson

  • 03 Jun 2014
  • PE
  • NR

Preqin’s Funds in Market data shows that energy-focused fundraising has picked up momentum in recent years, particularly in the region of North America, as many private equity firms have shifted away from renewable energy investing and redirected their attention to the exploration and production of fossil fuels. Statistics show that funds focused on energy investing (i.e. comprising investments primarily in any of the following industries: energy, oil and gas, power and utilities) have raised a total of almost $17bn via 15 funds holding a final close so far in 2014. Of these funds, 12 are focused on investing in North America and account for $14bn of the capital raised for energy investing as of June 2014. Having raised nearly $6bn in capital, Energy Capital Partners III is the largest of these funds to close so far this year. The infrastructure fund managed by Energy Capital Partners targets investments in North American energy infrastructure, including power generation, renewables, electric transmission and midstream gas sectors. 

2013 saw energy-focused fundraising reach its peak, having secured nearly $36bn via 37 fund closures, averaging just shy of $1bn per fund ($968mn). Of the $36bn raised in 2013, 96% is focused on investment opportunities in North America. The largest energy-focused fund to close in 2013 was Riverstone Global Energy and Power Fund V. The natural resources fund managed by Riverstone Holdings secured $7.7bn for investments in the oil & gas, energy and power industries having surpassed its $6bn target. The firm is also in market with its follow-on fund; Riverstone Global Energy and Power Fund VI is targeting $7.5bn, and is the largest energy-focused fund currently in market. 

Blackstone Group is an example of a firm that abandoned the fundraising effort for its first dedicated cleantech fund in 2011. The firm then went on to complete fundraising for Blackstone Energy Partners, a vehicle focused on energy and natural resources opportunities within a variety of sectors including exploration and production, energy services and equipment, midstream, downstream and power with a mammoth final size of $2.5bn. Blackstone Group are also likely to launch Blackstone Energy Partners II this year, seeking $4bn. 

A number of private equity power houses have also entered into the energy sector having raised or are seeking capital for their debut energy-dedicated vehicles. Kohlberg Kravis Roberts recently held a final close on KKR Energy Income & Growth Fund I on $2bn, surpassing its initial target by $500mn. Warburg Pincus is also in the process of raising its first energy-dedicated fund, seeking $3bn for Warburg Pincus Energy Fund. 

Should energy-focused fundraising maintain its momentum during the second half of 2014, the year could equal or possibly surpass the peak seen in 2013. Preqin data shows that there are currently 76 energy-focused funds in market seeking an aggregate $49bn in capital commitments. Twenty-nine of these vehicles have held at least one interim close having garnered nearly $7bn in investor capital. The majority of the funds in market (59%) are focused primarily on investments in North America, seeking $37bn, followed by 13 Europe-focused funds seeking over $4bn. Funds targeting investment opportunities in the energy sector across more than one region outside of North America and Europe are aiming to raise nearly $6bn in capital commitments. 

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