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Back to blog October 21, 2019 2 Comments Author: Kendra Jalbert

Private Equity Investing in Oil & Gas and Renewable Energy

In advance of the Rice Energy Finance Summit, I explored private equity investment trends in the energy sector using data from our M&A research database. The chart below compares PE investments in oil & gas versus renewable energy, as a percentage of total PE platform investments (add-on investments excluded).


Private Equity Investments in Oil & Gas Over Time

Following the 2014 crash in oil prices, private equity investments in oil & gas companies (exploration and development, producers, service providers and related manufacturers) dropped precipitously from a ten-year high of 5.5% in 2012 to just above 1% in 2019YTD.

With the price decline and resulting margin compression, oil & gas companies are striving to operate more efficiently by leveraging technology. When margins rebound, private equity will likely have a greater appetite for investments in this sector.

Private Equity Investments in Renewable Energy Over Time

The reduction in fossil fuel pricing has also made renewable energy less competitive. Investments in renewable energy (hydropower, wind, solar, and biofuel) dropped from a ten-year high of 2.6% in 2009 to 0.3% in 2019YTD.

In Comparison to all Private Equity Investments

By way of reference, in March we reviewed all private equity platform portfolio company acquisitions in 2018 and categorized them by industry as seen in the chart below. Nearly a third of all PE investments were represented by four main industries: Healthcare (~9%), Software (~8%), Manufacturing (~6%) and Business Services (~5%).

Most Active PE Firms – Oil & Gas

  1. EnCap Investments
  2. Kayne Anderson Capital Advisors
  3. Lime Rock Partners
  4. Riverstone
  5. Natural Gas Partners

Most Active PE Firms – Renewable Energy

  1. New Energy Capital
  2. Norfund
  3. Platina Partners
  4. Omnes Capital
  5. Actis

About the Rice Energy Finance Summit

The 11th annual Rice Energy Finance Summit will take place on November 1st, 2019 at Rice University in Houston, Texas. Senior executives, investors, advisors and policymakers will convene to share their perspective on the linkages between the industry’s commitment to capital discipline and the imperative to generate sustainable returns for investors, all against a backdrop of changing business models, capital markets constraints, increasing private ownership and uncertain growth prospects. Register to Attend – 20% discount with PEINFO code.

2 Comments:

c. whyte 1 month ago

Do you have this data expressed in numbers of transactions and total dollars as well as the above percentages?
If so, I would love to have it.
C

Kendra Jalbert 1 month ago

Chris –
Thank you for the post. I would be happy to prepare a custom data file for you. Note, we don’t track financials for the transactions but instead focus on capturing events. Please feel free to give me a call at your convenience to continue the conversation. You can reach me at (512) 496-4359.
– Kendra