4D Global Energy, a French-based oil and gas focused private equity manager backed by Société Générale Asset Management, has held a first close on $60m for a fund targeting the oil and gas industry.
The fund, the first of its type in Europe, which has received a $25m commitment from SGAM, hopes to raise $150m by the year-end. The fund is targeting profitable mid-market companies across all energy sectors primarily in Europe, although it will look to avoid speculative exploration, trading or technology risks.
The fund has already completed its first investment, acquiring a minority stake in a European refinery business and is in advanced due diligence with a second business. The fund will make a total of around 20 investments.
4D’s team of partners is drawn from a group of energy specialist and include Simon Eyers former co-head of utilities at CSFB; Jérôme Halbout, former head of energy at Crédit Lyonnais; and Tighe Noonan, ex-global head of oil & gas at Societe Generale.
The advisory board includes names such as Sadek Boussena, former president of OPEC and former minister of Energy and Industry for Algeria; John Snyder, the founder of Snyder Oil Corp; and Alain Madec, former head of strategy and finance of TotalFinaElf.
Global Private Equity, which is based in Paris, is acting as placement agent for 4D.
Oil and gas is a sector which traditionally has received little attention from generalist private equity funds despite accounting for around 20 per cent of world GDP. Between 1997 and 2000, US venture capital firms invested no more than two per cent of total capital raised in energy. Investors tend to be put off by the cyclicality of energy investing, which usually means being able to tolerate at least one downturn as a long-term investor.
European private equity firms including 3i, Bridgepoint Capital and Aberdeen Murray Johnstone are active in the sector, but 4D is the only European fund of its type that will focus exclusively on it. In October, 3i provided £30m to CH4 Energy seeking to acquire interests in marginal and dormant gas discoveries from major energy players.