Niche secondaries firm LSV Advisors has made a bet on the US shale gas market, which has experienced an uptick in fortunes over the past year.
Four upstream assets have been moved out of funds managed by Houston-headquartered Outfitter Partners into a continuation vehicle led by the special situations specialist, according to a statement.
The companies are focused on three shale gas basins: Marcellus in Pennsylvania, Woodford in Oklahoma and Cotton Valley in Texas, plus a conventional oil play in Wyoming.
“These well delineated and understood assets provide an excellent base from which to build value in the portfolio in the currently very favourable commodity price environment,” the statement noted.
The assets were sold out of TPH Partners II and two related co-investment funds, according to managing partner of Outfitter George McCormick. TPH II is a 2013-vintage, natural-resources-focused fund, according to data from affiliate publication Private Equity International data.
TPH is the legacy private equity business of investment bank Tudor, Pickering, Holt & Co, where McCormick was managing partner, according to his corporate biography. TPH was sold to Perella Weinberg Partners in 2016, the same year McCormick left to found Outfitter.
Around 22 percent of the total raised by the continuation fund is follow-on capital to develop the four assets, McCormick said. Outfitter is not disclosing the size of the vehicle.
There was no financial adviser, Secondaries Investor understands. DLA Piper was legal adviser to the sponsor.
New York-headquartered LSV is investing its Special Opportunities Round VI, Secondaries Investor understands. The fund closed this year with more than $700 million in commitments.
In May, Secondaries Investor reported that the market for energy assets had become more favourable. The war in Ukraine is driving commodity price inflation, which in turn is boosting pricing for energy assets on the secondaries market.
“It’s like night and day” compared with a year ago, said former M2O Private Fund Advisors’ head of LP secondaries Jake Stuiver, who last week joined William Blair.