Carlyle commits $500m to India-focused Magna Energy

The Carlyle Group has announced that it will deliver an equity line of up to $500 million to fund upstream oil and gas company Magna Energy.

The investments will be made through Carlyle International Energy Partners, (CIEP), Carlyle’s energy platform that deals with investments outside of North America, and will seek opportunities primarily in India’s oil & gas sector.

The fund closed on $2.5 billion in March 2015, and was Carlyle’s fastest ever first-time fund raising with commitments from 160 investors.

CIEP’s managing director, Bob Maguire, told Private Equity International that the equity would be delivered from an initial equity line of $250 million, but that there would be an option to draw down a further $250 million to invest at a later stage. 

Magna, which was founded by former UK-listed Cairn Energy duo Mike Watts and Jann Brown, will focus on identifying blocks of land on the Indian Subcontinent in order to create a full cycle oil & gas company through acquisitions and local licensing rounds.

The primary focus will be on development and production with a secondary focus on exploration.  India is expected to make up the bulk of the investments, although opportunities in both Myanmar and Bangladesh are also a possibility.

Maguire told PEI that the exploration segment of the operation would never rise above 10 percent to limit risk to the overall portfolio.

Carlyle has developed an energy investing platform with a total of over $10 billion in capital to deploy across oil & gas exploration & production, mid- & downstream, refining & marketing and oil field services.

CIEP accounts for investments in Europe, Africa, Latin America and Asia, while its North American energy investing commitments includes NGP Energy Capital Management, where Carlyle owns 55 percent of management fee-related revenues, project finance, (Energy Mezzanine), power, (Cogentrix), and further buyout capabilities such as Philadelphia Energy Solutions and Kinder Morgan.

Watts and Brown have sixty years’ combined experience in the oil industry, with the former widely credited with overseeing Cairn Energy’s successful oil discovery and subsequent production successes in India’s Rajasthan state.

The investment will be led by managing director and head of CIEP Marcel van Poecke along with Maguire.

Magna co-founders and joint CEOs Mile Watts and Jann Brown said: “We’re delighted CIEP has agreed to support the Magna leadership team with a significant equity investment as we seek to build our business across South Asia – a region we both know well.

Furthermore, we are excited at the prospect of helping to drive economic growth in the Indian subcontinent by bringing new technology and capital to the local oil and gas sector – India, in particular, is set to emerge shortly as the world’s fastest growing major global economy.”

Van Poecke commented: “We are pleased to partner with Jann Brown and Mike Watts, who have a long history of success in the Indian Subcontinent. CIEP will provide capability and support through its global energy platform as we seek to participate in the economic growth of India and neighbouring countries.”