QEM Management LP (Quantum) said last week that it has closed Quantum Energy Partners IV LP (QEP IV), a $1.32 billion private equity fund dedicated to the energy industry. QEP IV is Quantum’s fourth private equity fund launched since 1998.

The fund already has made its first investment. In December Quantum’s QEP IV was part of an investment group, which also includes Carlyle/Riverstone and Lime Rock Partners, that provided $470 million in equity commitments to Denver-based Vantage Energy LLC, a private oil and gas company created last year by the former president of EnCana Oil & Gas USA Inc. and the former CFO of Bill Barrett Corp. (see NGI, Dec. 25, 2006).

Quantum Managing Partner S. Wil VanLoh Jr. told NGI he expects the fund will have no trouble beating its targeted rate of return of 25-30%, but he said the days of easy money in the energy patch are over for now.

“I think anybody that’s been investing in this space over the last six or seven years has got to have made money, or you’ve got to wonder if they have a pulse,” he said. “Purely from commodity price appreciation if you bought something it was probably worth more a year down the road than it was when you bought it. The easy money… everybody can make money in that market.

“What I think we’re back to now is certainly we’re going to have volatility in commodity prices, but I don’t think necessarily it’s going to be a continued uptrend. I think we’ll have some low gas prices; I think we’ll have some high gas prices. Generally speaking, market expectations are built in that gas pries are going to recover and oil is going to average somewhere between $50 and $70. It’s really back to making money the hard way, the old-fashioned way.”

Quantum will primarily target investments in the oil and gas sector while also considering opportunities in the midstream, oil field service, coal, power and alternative energy sectors, the Houston-based company said. Quantum’s strategy is to make $25 million to $150 million investments in entrepreneurial management teams that demonstrate competitive advantages within a well defined segment of the energy industry and that are focused on building assets or companies that serve as either platform companies to take public or as attractive acquisition candidates for larger energy companies.

Quantum has more than $3.2 billion in capital under management, of which $2 billion is in its family of private equity funds and $1.2 billion is co-managed with Aspect Energy LLC in its direct property acquisition fund, Quantum Resources.

Greenwich, CT-based Champlain Advisors, LLC, a global fund placement and investor relations advisory firm, served as Quantum’s financial advisor in raising the fund.

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