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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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The Largest-Ever Hard Assets Fund Bodes Well For Energy

Cushing storage

Private equity continues to rise as a force in natural resources, with the resource PE industry this week unveiling the largest fund raised in global history.

Private equity analysts Preqin reported yesterday that the Global Infrastructure Partners III fund closed on $15.8 billion in new cash during the first quarter of 2017. Making it the biggest PE fund ever created focusing on hard assets.

Infrastructure Partners III focuses specifically on energy, with much of the fund likely to go to assets like pipelines and other midstream facilities, possibly in addition to upstream assets.

Amazingly, this fresh watermark for biggest fund comes just a few months after the record was previously broken. With the bar having been raised in Q3 2016 by a $14 billion raise from Brookfield Infrastructure Fund III.

But PE appetite for hard assets has continued to grow over the last few quarters. In fact, Preqin’s data shows that overall natural resource private equity funding hit a total $25 billion during the past quarter — marking the third-highest quarterly total in the last five years.

Add that to a record $32 billion raised for resource PE in Q3 2016, and you can see how the last nine months have been very good for the sector. Check out the chart below.

(Click to enlarge)

Natural resource private equity funds raised $25 billion during Q1 2017, the third-highest quarterly total in the last five years Related: Is An Iraqi Production Slowdown Inevitable?

Once again, the majority of the recent quarter’s fundraising was aimed at energy, with a full $24 billion of the $25 billion raised earmarked for the oil and gas sector.

Interestingly, Preqin also found that resource funds are getting more active in deploying their capital. With uncommitted cash — or “dry powder” — held by funds declining over the past 15 months.

That means big money is now flowing into projects. And it’s not going to stop — as we move into Q2, there are reportedly 250 new resource funds being marketed globally, seeking a combined $110 billion in new capital.

Watch for news on more funds being closed, and for big PE investments announced in energy, mining and beyond.

Here’s to getting funded.

By Dave Forest

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