Some of the world’s biggest buyout firms are set to do battle for the oil and gas assets of Dominion, a US energy business, which could be valued at up to $15 billion.
Carlyle, Warburg Pincus and Madison Dearborn are reportedly teaming up with the Goldman Sachs and Morgan Stanley to form one bidding group. The banks will both advise and contribute equity to the consortium, which may also include energy specialist First Reserve. Separately, the Blackstone Group has joined forces with Kohlberg Kravis Roberts and Texas Pacific Group to submit a competing bid.
Trade players are also likely to be involved in the auction, which is expected to value the assets at about $15 billion.
Dominion said last year that it was looking to sell its exploration and production assets. It was planning to sell the offshore, US onshore and Canadian properties separately, but the interested parties are reportedly planning to bid for all three at once.
It is the latest example of private equity firms taking an interest in ‘upstream’ oil and gas assets. In previous years the industry has shied away from this part of the energy sector, due to the risks inherent in the business, but increasingly sophisticated hedging strategies are allowing buyout firms to mitigate this risk to a much greater extent.