Energy funds pricing rebounds – Setter report

The recovery of oil prices has boosted the attractiveness of the asset class, according to analysis by intermediary Setter Capital.

Pricing for energy fund stakes bounced back at the beginning of this year after at least two years of more than double-digit discounts.

The average top bid or indication for an energy fund was 90.4 percent of net asset value in the 90 days to 28 February, compared with 85.9 percent in the same period last year, according to a price report by intermediary Setter Capital. The average top price for the same period two years ago was 79.3 percent, the report noted.

Energy fund prices have bounced back this year given the strong rise in oil prices, Setter founder Peter McGrath told Secondaries Investor. Buyers are more optimistic about the underlying portfolios, and that is reflected in pricing, he said.

Brent crude is trading at $77 per barrel, a 49 percent year-on-year increase, according to data from Bloomberg.

In a roundtable interview with sister publication Private Equity International in March, HarbourVest Partners managing director Jeff Keay singled out energy as one of the key secondaries growth areas as LPs look to reduce their exposure to the asset class.

“Those assets are still trading at discounts, but I think LPs are looking to de-risk their portfolios given the risk profile,” he said. “It was painful for some LPs when the price of oil bottomed out.”

Large buyout funds priced at 97.74 percent in the three months to 28 February, up 2.79 percent year-on-year, while infrastructure saw a slight increase of 0.41 percent year-on-year to 98.6 percent.

The price of real estate funds declined by -0.28 percent to 89.88 percent of NAV, compared with last year’s reference period.

The average top price is derived from data given by the more than 1,300 buyers in the three months to 28 February, Setter said in the report.