Intervale Capital has rounded up $280 million (€179 million) in commitments for its debut fund, expected to give the US firm some $500 million in purchasing power for mid-market oilfield services deals.
The private equity firm was founded by Charles Cherington and Curtis Huff, each of whom had previously established similar private equity firms, Cherington Capital and Freebird Partners.
After working together on several projects, the two decided to team up to “exploit an inefficiency in the market”, Cherington told PEO.
Other private equity firms investing in the oil and gas industries have “all moved up-market and there’s a real vacuum at the lower end of the market”, he said.
Intervale will only do deals in which the management team reinvests into the company, and looks to take controlling stakes in “oil field service companies that deploy technology geared toward lowering drilling costs or enabling new plays to take place that couldn’t otherwise”.
Intervale itself completed the first tranche of fundraising for its Intervale Capital Fund, then brought in placement agent Champlain Advisors – a move Cherington said he regrets not having done sooner, given the number of contacts introduced to the fund.
The fundraising, which began in early 2007, went “extremely well for a debut fund”, said Terence Crikelair, Champlain’s managing partner. The fund exceeded its $200 million target.
“[Big] name institutions that know the energy space have stepped up and sponsored these guys,” he added, though declined to identify which endowments, pensions, foundations and international investors made commitments.
Intervale expects the fund to make six to eight platform investments, and has already closed three deals with a fourth expected to complete in July or August, Cherington said.
Equity cheques will typically be around $25 million, he said.
Its seven investment professionals work out of offices in Houston, Texas and Boston.