Hony taps Canadian oil and gas reserves

The China-focused GP has partnered with Canada’s CCEC for a C$500m joint venture.

Canada Capital Energy Corporation (CCEC) and China-focused private equity firm Hony Capital have formed a joint partnership to invest in West Canadian oil and gas assets, according to a statement.

Hony and CCEC’s joint principal shareholders, ZhongRong Group and Zhejiang Rongsheng Holding Group, have invested a combined C$500 million ($456 million; €332 million) in the venture.

The arrangement with Hony, and the additional financial support from CCEC's two current major shareholders, will allow CCEC to undertake its growth strategy of building a high-value and balanced portfolio through acquisitions and follow-up development.

CCEC, a private oil and gas company that focuses on low-risk development, exploration and exploitation in Western Canada, now plans to explore light oil- and liquids-rich natural gas opportunities throughout the Western Canadian Sedimentary Basin.

The deal indicates a continued interest from Asian investors in North American oil and gas opportunities.

In October last year, Japanese fund of funds AI Capital launched a $300 million vehicle that planned to tap domestic institutional investors to invest in North American energy-focused funds, Private Equity International reported earlier.

Similarly, in March this year, the $25 billion New Zealand Superannuation Fund pledged $250 million to Kohlberg Kravis Roberts to invest in North America’s energy sector. The Super Fund put $175 million into new KKR private equity investments in North American natural gas exploration and production, midstream, downstream and/or energy infrastructure and services.

The remaining $75 million will be invested with the $2 billion KKR Energy Income and Growth Fund, which looks for opportunities in unconventional gas and oil resources in North America. KKR's fund closed on $2 billion in March, $500 million over its reported target, PEI reported earlier. 

The interest in the sector has been on-going over recent years, attracting some of Asia’s most heavyweight investors.

In May 2012, Hong Kong-based GP RRJ Capital also invested in the US energy sector, with its $468 million investment in liquefied natural gas export plant Cheniere Energy Partners, alongside Singaporean sovereign wealth fund Temasek Holdings.

China Investment Corporation and the Government of Singapore Investment Corporation also later jointly invested $1 billion in the same company.