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PE’s interest in US energy continues to plunge

Between 2015 and 2017, the number of new energy funds raised in the US fell by more than 50%. But some firms, both old and new, are still gathering fresh capital.

Between 2015 and 2017, the number of new energy funds raised in the US fell by more than 50%, per the PitchBook Platform. In terms of new investments in the energy sector, the story has been similar—if not quite so extreme.

Firms both old and new, though, are still raising cash in the space. SCF Partners has gathered $800 million for its ninth flagship energy vehicle, per an SEC filing, while Drillcore Energy Partners has announced plans to collect $250 million for its debut fund. SCF has offices on three continents and more than a quarter-century of experience in the sector, while Drillcore was recently launched by Evan Turner, a former director at StormHarbour Partners.

SCF’s energy vehicle is just the fourth to close in the US so far this year, per PitchBook data, a stark drop from a peak of 26 energy funds that closed in the US during 2014. Recent years have also brought a steep decline in capital raised by firms in the space:

While the fall in frequency for new energy funds seems to have flattened out in the first three months of 2018, the decline is still ongoing in terms of new investments. Firms have completed fewer than 50 energy deals so far this year, per PitchBook data, well off the pace of last year’s 261 transactions—which was itself already a sharp decline from a recent high of 400 US energy deals in 2014.

The biggest US energy deal to date in 2018, however, would be significant in any year. In March, a consortium including Energy Capital Partners and Canada Pension Plan Investment Board acquired power-plant operator Calpine in a $5.6 billion take-private move, the third-largest energy buyout of the past decade, per PitchBook data.

Several other moves in 1Q indicated mega-deals could be making a comeback.

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    Written by Kevin Dowd

    Kevin Dowd wrote The Weekend Pitch newsletter for PitchBook, covering startups, buyouts and the rest of the private market.

    A native of the Pacific Northwest, he’s an alumnus of the University of Washington with a degree in creative writing and journalism. He enjoys books and basketball and, most especially, books about basketball. He feels uncomfortable writing about himself in the third person.

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