Apollo Bucks Trend With $2.8b For New Oil & Gas Fund by Kevin Dowd, PitchBook
Apollo Global Management has raised about $2.8 billion for its Apollo Natural Resources Partners II fund, according to an SEC filing, easily the largest vehicle raised this year by a private equity firm to invest in the energy sphere. Collecting that hefty pool runs contrary to the current trend. After a massive fundraising year in 2015, firms have largely stayed away from the energy industry.
That’s not exactly a surprise in light of the sector’s dysfunction. Crude oil prices fell off a cliff in 2H 2015, and a minor bounceback in the early part of this year hasn’t been enough to save many companies from going under. Between the start of 2015 and August 1, 2016, a whopping 90 oil & gas producers in North America filed for bankruptcy, carrying approximately $66.5 billion in cumulative debt, according to a report from Haynes Boone.
Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More
Every year from 2012 to 2015, firms raised between 19 and 22 oil & gas funds, according to the PitchBook Platform. Over the same period of time, the amount of capital in those funds more than doubled. This year, though, marks a major decline in both vehicles raised and the size of those vehicles.
Here’s a quick year-by-year breakdown of closed oil & gas funds:
Apollo Global Management
Since the start of 2008, 13 oil & gas funds have closed on $4 billion or more—that includes three each in 2014 and 2015, combining for nearly half the total. The largest recent fund is EnCap Energy Capital Fund X, which closed on $6.5 billion in April 2015. It was followed three months later by the close of ArcLight’s sixth energy fund on $5.6 billion.
The lack of comparable funds for 2016 so far likely speaks to a lack of attractive targets, as so many companies battle to survive the dip in the energy markets. Perhaps Apollo’s new raise indicates that the firm sees things differently. CEO Leon Black indicated as much in his recent 2Q earnings call: “We have put a lot of capital to work, and we also have a robust pipeline today of deals that we like.”
We’ll see if a torrent—or even a trickle—of energy deals follows now that Apollo has more billions in its coffers.