Large private equity firms are experiencing some déjà vu…
Following the 2008-2009 financial crisis, these firms launched specialized vehicles focused on both debt and equity in the beaten-up financial services sector.
Five years later, the same thing is happening again. The only difference is, this time the focus is on the energy sector.
The sentiment of many private equity firms was summed up nicely during an interview with the Chairman and CEO of the Blackstone Group L.P. (BX) Stephen Schwarzman at the World Economic Forum in Davos, Switzerland. “Oil is the biggest investment opportunity in the world,” he said.
Everyone Is Joining the Party
Schwarzman and others in private equity are putting their money where their mouth is.
Blackstone President Tony James told analysts on January 29 that his firm was “scrambling” to invest more than $10 billion into energy companies. “We believe the recent free fall in energy prices will prove to be relatively short term, so we view this as a good buying opportunity,” said James. In fact, just last month the company put together a $4.5 billion fund to invest in energy equities. And the company is asking clients for another $1 billion to invest into bonds of distressed energy producers.
Other private equity firms are joining Blackstone in the scramble to pick up oil and gas assets on the cheap. These firms include Apollo Global Management, LLC (APO), KKR & Co. L.P. (KKR), and Carlyle Group L.P. (CG). These firms raised more than $15 billion recently specifically for investing into oil companies.
Carlyle Group’s Co-CEO William Conway echoed Schwarzman’s sentiments, saying, “With our funds re-loaded, we are well positioned to take advantage of market volatility, particularly in the energy sector.”
In December, Carlyle Co-Founder David Rubenstein said his firm has about $9 billion to invest into energy, and a first-ever international energy fund and North American energy and power funds to invest it in. Many believe Carlyle will raise another $3 to $4 billion this year to invest into energy.
