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Natural Resources Private Equity Fundraising – March 2014

by Kamarl Simpson

  • 24 Mar 2014
  • PE
  • NR

Preqin’s Funds in Market online service highlights the record year enjoyed by natural resources fundraising in 2013; the year saw the largest amount of capital raised for natural resources fundraising since 2009, with 27 funds reaching a final close in 2013 having raised an aggregate $28bn. This represents a significant increase in comparison to 2012 and 2011, in which $23bn and $8bn was raised respectively. Natural resources fundraising looks set to remain optimistic, with three natural resources funds holding final closes so far in 2014, having collectively garnered $3.3bn in capital commitments, in addition to 49 natural resources private equity funds currently in market, which are targeting an aggregate $30bn in capital commitments. Of these funds currently raising, 14 have held at least one interim close, securing just shy of $6bn in aggregate capital commitments to date. 

Breaking down these natural resources private equity funds in market by geographic focus, 45% predominantly target investment opportunities in North America, eight percent focus on opportunities within Europe and seven percent primarily focus on investments in Asia. The remaining 40% invest in regions outside North America, Europe and Asia, half of which are seeking investment opportunities across more than one region outside of these areas. 

The average target size of these 49 funds in market is $684mn. The two largest natural resources funds in market are First Reserve Fund XIII and Natural Gas Partners XI, which are seeking $5bn and $4.5bn respectively. First Reserve Fund XIII is managed by First Reserve Corporation and specifically focuses on investments in energy, mining, oil and gas, power and renewable energy industries globally. Natural Gas Partners XI is managed NGP Energy Capital Management and focuses on investing in North America-based businesses in the oil and natural gas production, energy midstream and oilfield services industries. Of all subcategories of industries that fall under the natural resources umbrella, fund managers seem particularly drawn to the energy sector, with the belief that there are clear opportunities for private equity investments to be found in this relatively underpenetrated industry. 

The largest fund to close in 2014 to date is KKR Energy Income & Growth Fund I. Managed by Kohlberg Kravis Roberts (KKR), the fund closed having raised $2bn, surpassing its $1.5bn target, and focuses on investing  in oil and gas development, as well as minerals, royalties and mezzanine debt opportunities in North America.

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