Private equity warms up to oil deals with $1t warchest: EY

The world’s private equity funds, with a cash pile of around $1 trillion, are stepping up their interest in the oil and gas industry, with almost a half expecting to buy assets in the sector over the next year, a survey showed on Tuesday.

Funds’ appetite for investments in the sector fell sharply after the start of the oil price route two years ago. But recent signs of a rebound, coupled with abundant assets around the world, are turning the tide, advisory firm EY said in a survey of 100 private equity (PE) firms.

Around 43 percent of the firms said they were planning acquisitions by the first half of 2017 and 25 percent before the end of the year.

“Activity will pick up at the back end of the year but people are still cautious,” Andy Brogan, EY Global Oil & Gas Transactions Leader told Reuters.

“The fact that the oil price seems to be sticking is gradually making people more confident that they can make some bets.”

PE firms, which typically seek high returns on investment, have a warchest of around $971 billion, EY said.

The expected pickup in activity, however, is likely to vary by region.

North America remains a focal point after a large number of assets was placed on the block as the shale oil and gas boom stuttered, including a rising number of distressed companies, Brogan said. Relatively accessible financing is also supportive, he added.

Asia Pacific is also attracting buyers’ interest, although the size of the market is smaller, while mature basins such as the North Sea remain less attractive due to high operating costs and liabilities linked to the clean up of old wells.

PE funds such as Carlyle Group, Blackstone Group and CVC Partners have all set up management teams in recent years to acquire and manage oil and gas assets.

Buying activity so far has nevertheless been limited and focused mostly in North America.

After peaking in 2014 at 104 deals worth $39 billion, PE activity fell sharply last year to 64 transactions, according toEY. The first quarter of 2016 saw 12 deals worth $7.6 billion, including a group of U.S.-based funds acquiring a 12.3 stake in Plains All American Pipeline for $1.5 billion.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.