Private energy equity behemoth Riverstone Holdings LLC has raised $7.7 billion to invest in energy businesses, exceeding its original $6 billion target, the firm said Wednesday.
Riverstone Global Energy and Power Fund V LP to date already has invested about $2.3 billion in 19 companies, management said. Among other things, in March more than $550 million was invested in a series of deepwater exploration projects in the Gulf of Mexico (see Daily GPI, March 6).
Fund V is the first Riverstone fund raised independently of Carlyle Group, the buyout firm that helped launch the private equity 13 years ago. The private equity firm traditionally competes with other private money, such as First Reserve and EnCap Investments, to buy into or form energy ventures.
As of 3Q2012, the 2005 fund had a 1.7 times rate of return (ROR) on investor money, while the 2003 fund had a 2.7 times ROR, according to the California Public Employees Retirement System.
Riverstone likes to fund management teams in which it has found success before, such as GOM producer Dynamic Offshore Resources, which was sold to SandRidge Energy Inc. last year for about $1.3 billion, with profits of $880 million-plus for the firm and its executive team (see Daily GPI, Feb. 3, 2012). Since then Riverstone has committed $600 million to the former Dynamic executive team’s new company, Fieldwood Energy.
Riverstone also provided funding for executives who had led Three Rivers Operating Co. LLC, which was sold last year to Concho Resources Inc. for $1 billion, netting a nearly 2.5 times its investment.
“Our model has always been to partner with proven management teams to jointly build companies from the ground up while focusing selectively on buyouts that offer great organic growth potential,” said Riverstone co-founders David M. Leuschen and Pierre F. Lapeyre Jr. Fund V “will pursue the same investment strategy that Riverstone was founded on 13 years ago and has followed ever since — building energy and power businesses around the world with exceptional management teams. To date, Fund V has invested $2.3 billion in 19 companies, including eight repeat management teams.”
Riverstone partner Elizabeth K. Weymouth, who is responsible for capital raising, noted that “investors are the lifeblood of our business. By providing global and diversified exposure to the energy industry while maximizing risk-adjusted returns, Riverstone strives to help our limited partners meet their investment objectives. With Fund V, we have been fortunate to build upon our existing relationships with many of the world’s leading investors while significantly expanding our limited partner base with new strategic investment partners.”
One of Riverstone’s biggest U.S. investments to date is the $7.15 billion acquisition last year of EP Energy Corp. (see Daily GPI, Feb 27, 2012). In March it paid $825 million for Houston’s Utex Industries Inc., which manufactures gaskets for the energy industry. Former Anadarko Petroleum Corp. CEO Jim Hackett joined the board earlier this month and is a co-leader of the Houston office (see Daily GPI, June 17). Lord John Browne, who once was chairman of BP plc, also serves on the board.
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