Fifty-five percent of private equity (PE) executives polled by EY said oil and gas industry investment activity now is the foremost driver of their investment activity in the industry.
Forty-four percent of the 100 respondents surveyed cited availability of financing as the second largest driver in PE activity, while 36 percent cited global expansion as the third largest driver in PE activity.
PE is expanding beyond its traditional focus on leveraged buyouts into an array of new asset classes, according to EY and Mergermarket’s new report, “Financing the Future Energy Landscape: Private Equity Trends in Oil and Gas”.
The largest funds are transforming themselves into diversified alternative asset managers, offering investors a consolidated platform for PE, venture, debt and credit funds, hedge funds and fund-of-funds investments, EY noted in the report.
Focus has also has become a greater differentiator than ever before within the PE sector, with funds becoming more open-minded to deploying capital in emerging markets with growth opportunities, EY noted.
PE firms are well positioned to be a key player in driving future growth of the oil and gas industry, which is in a period of major capital investment.
“PE firms can leverage their operational and commercial insight, oil and gas sector expertise and financial discipline to influence outcomes,” Michael Rogers, EY’s global deputy private equity sector leader, said in a Dec. 3 press release.
PE funds are finding that the oil and gas industry fits well into their evolving model of bringing genuine operational and commercial insight to their investee companies to develop and execute winning strategies.