Category Archives: Private Equity

Energy partnerships simplify business models to spur growth

Some publicly-traded U.S. energy pipeline and oil-storage partnerships are restructuring into simpler business models to help attract new investors and spur growth.

Rising oil and gas production has spawned billions of dollars of new transport, gathering and storage projects. But the companies most responsible for these projects can allocate up to 50 percent of their income to the general partner, leaving less for other holders or to invest in new projects.

Historically, these firms have passed most of their income along to holders and sold equity or debt to finance new projects or acquisitions. But in the last year, what they have had to offer investors has jumped. MPLX Energy Logistics LP, for instance, paid a 9.7 percent annualized distribution last quarter to its holders, up from 7.9 percent a year earlier, according to figures from investment firm East Daley Capital Advisors.

“The higher cash yield makes the economics of these projects a little tougher,” said Kendrick Rhea, an analyst at East Daley Capital. He estimates the cost of equity has risen nearly a third for some companies in the last year.

Source: NuStar, other energy partnerships simplify business models to spur growth

Former $2 billion private equity fund now nearly worthless: WSJ

Wells Fargo (WFC.N) and a number of other lenders are negotiating to take control of a hedge fund previously valued at more than $2 billion that is now worth close to nothing, according to a report from the Wall Street Journal.EnerVest Ltd., a Houston private equity firm that focuses on energy investments, manages the private equity fund that focused on oil investments. The fund will leave clients, including major pensions, endowments and charitable foundations, with at most pennies on the dollar, WSJ reported.The firm raised and started investing money beginning in 2013 when oil was trading at around $90 a barrel and added $1.3 billion of borrowed money to boost its buying power. West Texas Intermediate crude prices closed at $46.54 a barrel on Friday.

Source: Former $2 billion private equity fund now nearly worthless: WSJ

Express Energy Services to be acquired by funds managed by affiliates of Apollo Global Management

Funds managed by affiliates of New York-based Apollo Global Management LLC NYSE: APO and participating company management will acquire Houston-based Express Energy Services from its existing shareholders.Financial terms of the deal were not disclosed, the oilfield services company said Oct. 24, and it is expected to close in the fourth quarter. Express has approximately 1,700 employees in more than 30 locations, and it will continue to be headquartered in Houston.

via Express Energy Services to be acquired by funds managed by affiliates of Apollo Global Management – Houston Business Journal.

Warburg Pincus raises $4 billion private equity fund for energy

Warburg Pincus LLC said on Monday it had raised $4 billion for its first energy-focused private equity fund, exceeding its $3 billion target and making it the latest investment firm looking to tap into opportunities in North America’s shale gas boom.Warburg Pincus joins peers such as Blackstone Group LP BX.N and Apollo Global Management LLC APO.N that already have dedicated investment funds for energy deals alongside their flagship, multi-sector private equity funds.

via Warburg Pincus raises $4 billion private equity fund for energy | Reuters.

Private Equity Betting Big On U.S. Energy Boom

The Blackstone Group L.P. NYSE: BX is expected to exceed its $4 billion target for its new energy fund by the time it finishes its money-raising process. Morgan Stanley NYSE: MS raised $500 million for Blackstone’s energy feeder fund in a single day, and the fund was oversubscribed by four times.Warburg Pincus LLC has also raised $4 billion this year for a new energy fund. The original goal for the fund was $3 billion, but after so much investor enthusiasm, Warburg Pincus increased the size of the fund by $1 billion. Earlier this year, KKR & Co. L.P. NYSE: KKR raised $2 billion for a new oil and gas fund. As of the end of 2013, $8.7 billion of the private equity giant’s $94.3 billion in assets was devoted to energy and infrastructure.Private equity players seem very eager lately to get a piece of American oil and gas, but it remains to be seen how long the energy wave will last.

via Private Equity Betting Big On U.S. Energy Boom: The Blackstone Group, L.P., KKR & Co. L.P., Warburg Pincus LLC Raise Big Money | Benzinga.