Aethon makes first-time co-investment with OTPP

For the first time, Dallas-based Aethon Energy Management has partnered with a public pension fund in a co-investment deal.

Aethon joined forces with Toronto-based Ontario Teachers’ Pension Plan (OTPP) and New York-based RedBird Capital Partners to acquire J-W Energy’s oil and gas upstream and midstream assets in Texas and Louisiana. The deal is valued around $400 or $500 million, according to a source familiar with the matter, and will merge with existing assets to form a new energy company, Aethon United.

The person added that Aethon’s contrarian view on markets helps the firm stay active in today’s conditions while other firms may experience losses.

Spokespeople for Aethon, RedBird and OTPP declined to comment the exact contribution to the co-investment from each of the three parties.

A RedBird spokesman told Private Equity International RedBird has worked with OTPP in the past, both having funded St. Louis-based cloud business services company TierPoint in its acquisition of data centre Xand in 2014.

As part of this transaction, disparate assets already owned by Aethon and RedBird will be lumped together with J-W to form Aethon Energy. The existing assets include assets from SM Energy and Noble Energy located in eastern Texas along with parts of Louisiana and Arkansas, and assets from Encana. in Wyoming 

This deal brings J-W’s assets comprised of about 84,000 net acres and 380 miles of infrastructure, bringing Aethon United’s assets to a total of over 350,000 net acres.

Aethon manages $1.6 billion in assets and focuses on direct investments in undervalued assets in the North American onshore oil and gas sector.

OTPP manages $171.4 billion in assets, as of 31 December and has marked an annual 10.3 percent of return since its inception in 1990. Aside from the headquarters in Toronto, OTPP has offices in Hong Kong and London. It allocates 11 percent, or C$29.08 billion ($22.1 billion; €19.95 billion), to private equity, according to PEI data.

RedBird also has an office in Dallas and targets growth-oriented private companies. RedBird spokesman told PEI RedBird does not have a traditional fund structure and therefore does not have fundraising deadlines. He said RedBird currently manages about $700 million in assets.