Andros Capital Partners recently proved it is still possible to raise $250m for a new oil and gas-focused fund — and that landing one large commitment is sometimes all it takes.
Beemok Capital, a family office that manages the wealth of billionaire Ben Navarro, accounted for nearly all of the money raised for Andros Energy Capital, said a person familiar with the matter. The fund has a handful of other investors, the person added.
Andros, a newly formed private equity firm based in Houston, announced the closing of the fund in August.
Navarro is the founder and chief executive of Charleston, US-based debt investor Sherman Financial Group, which also provides credit cards to people with poor credit through its Credit One Bank NA unit.
Andros plans to invest $25m to $200m in equity for each deal and also can make credit transactions from the fund, according to the firm. It sees particular opportunities in acquiring so-called non-operated working interests in oil and gas wells at a discount, said people familiar with the firm’s plans.
Owners of such interests, who don’t operate the wells but have to pay their share of drilling and other costs, can be more inclined to sell because today’s low commodity prices reduce their interest income, according to the people.
Andros also could buy the debt of distressed energy-infrastructure companies, as well as acquire oil fields through bankruptcy auctions or from other cash-strapped sellers, among other types of investments, the people said.
“The fund is exclusively focused on investments in the energy sector, but beyond that, we’ve got the ability to be opportunistic,” Andros founder and Managing Partner Phillip Gayle said. He was previously a managing partner at Millennial Energy Partners, an oil and gas-focused investment firm also based in Houston.
Gregory Beard, the former global head of natural resources at private equity giant Apollo Global Management, and Beemok Chief Investment Officer Kurt Palmer sit on Andros’s investment committee alongside Gayle but have no responsibilities for managing the fund, one of the people said.
Gayle declined to comment on the fund’s structure and its investors.
Andros wrapped up its fundraising effort while many institutional investors are abandoning the oil and gas sector because of low commodity prices and concerns about the effects of fossil fuels on the environment. That’s making it difficult for buyout firms to raise new funds dedicated to oil and gas deals. Only three such funds closed during this year’s first half, and none in the second quarter, compared with 19 vehicles in all of last year and a record of 44 in 2015, according to financial research company PitchBook Data.
Beemok, however, had sought for some time to expand its investments in the sector, and Andros’s willingness to pursue various types of deals was important to secure the family office’s backing, the people said.
“The market might be evolving towards more flexible capital approaches,” one of the people said.
Source: Wall Street Journal
