EnCap Investments LP will seek $5 billion for an energy fund as it prepares for an increase in spending on E&P, according to two people with knowledge of the plans.
The private-equity firm, which has backed 218 companies since 1988, will start gathering capital for its 10th fund in November, said the people, who asked not to be identified because the plans are private. The pool will invest in upstream companies, or those focusing on oil and gas E&P.
Investment firms including Blackstone Group LP, Carlyle Group LP and Warburg Pincus LLC have sought billions of dollars to take advantage of growth spurred by the shale boom over the past five years and oil demand from emerging markets. Analysts are reevaluating the shale revolution’s impact as the U.S. benchmark price fell to $79.78 a barrel on Oct. 16, the lowest since June 2012. Global oil demand has slowed this year, sending crude into a bear market, because of a weaker outlook from China and Europe.
Charles Bauer, EnCap’s head of investor relations, declined to comment on the fundraising plans.
Return Rate
EnCap, which has offices in Houston and Dallas, is seeking to match the amount gathered by its prior fund in 2013. With the prior vehicle, the firm aimed to commit $200 million to $300 million per deal to management teams that would acquire oil and gas reserves, according to a letter sent to clients in September 2012. The firm is still deploying capital from that fund.
EnCap raised $3.6 billion for its eighth fund in 2011, which was producing a 29% net internal rate of return as of June 30, according to performance data from El Paso Firemen & Policemen’s Pension Fund, a client.
David B. Miller, Gary Petersen, D. Martin Phillips and Robert Zorich lead EnCap. The firm has raised 18 institutional oil and gas funds with about $21 billion, according to the firm’s website.
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