Barclays Capital, the investment banking division of Barclays plc, said it bought a 40% stake in private equity firm NGP Energy Capital, giving Barclays a bigger stake in the North American energy capital management business. The deal follows Barclays Capital’s assumption of Duke Energy North America’s natural gas and power derivative contracts last November (see Daily GPI, Nov. 21, 2005).
NGP manages $2.9 billion in funds investing in oil and gas production, midstream and oilfield services companies. It also oversees the activities of NGP Capital Resources Co., a $261 million publicly traded business development company that focuses on providing senior debt and mezzanine capital to the energy industry, and NGP Energy Technology Partners, a $148 million fund investing in growth equity capital in companies providing technology related products and services to the oil and gas, power and alternative energy sectors..
“Commodities is an important growth market which we identified early and where we have risen to one of the top three global commodities service providers…,” said Barclays Plc President Bob Diamond. “This investment supports that footprint and is our first principle investment in North America, [in] an area where we have had great success in Europe.”
Roger Jenkins, head of principle investing at Barclays Capital, said, “We see energy as one of the most dynamic and interesting private equity investment areas over the next 10-15 years. We sought a way to jump start our presence in the direct energy investment business. NGP has the most advanced and well regarded investment franchise in the energy industry.”
NGP said the deal gives it significantly more financial backing and access to the global capital market. It will enable the fund to “expand significantly” in the energy capital management business.
Duke paid Barclays $700 million in cash to assume its derivatives portfolio last year. The price covered transaction costs and reflected the amount by which Duke’s portfolio was below current market value.
Barclays Capital began trading physical power and gas in North America in late 2004. The firm executes physical transactions with clients on several natural gas pipelines in North America and across power pools in the eastern United States. In 2004, Barclays Capital also added coal, freight, petrochemicals and emissions to its suite of products.
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