The unlisted natural resources industry has yet to recover momentum since the collapse in oil prices in 2015; while there have been some large fund closures, these have mainly been for vehicles that invest some of their assets in energy-related projects as part of a broader infrastructure remit. What dedicated natural resources activity has occurred has primarily been focused on energy assets in North America, fuelling the shale-gas boom in the US that has made the country one of the world’s leading energy providers.
In 2019 particularly, it is notable that just seven funds have reached a final close in Q1, a five-year low. While capital totals have broadly been on par with previous quarters, this is largely due to the closure of a single large infrastructure fund that will also make investments in energy.
There are some indications that this may improve in the coming months: a net 12% of investors intend to commit more capital to the asset class in 2019 than they did in 2018, and institutions generally expect to commit more capital to more funds as of the end of Q1 2019 compared to 12 months prior. The number of funds in market looking to serve this appetite has also risen, with the total amount of capital being targeted reaching $200bn for the first time since 2016.
Activity remains heavily focused on energy investments; despite long-term projections that resources like agriculture and water will become significant areas of potential, energy still offers the most opportunities for investment and the best performance prospects. Until that balance alters, or energy markets see a significant global shift, we can expect the natural resources industry to keep stuttering.
For more in-depth analysis on fundraising, fund currently in market, investors and more, download your copy of the Preqin Quarterly Update: Natural Resources, Q1 2019.
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