Quantum eyes $4.5bn hard-cap for Fund VII

Quantum Energy Partners’ previous fund closed on its $4.45bn hard-cap in July 2015.

Quantum Energy Partners is back in market with its seventh growth equity fund, Quantum Energy Partners VII, less than two years after the final closing of its sixth fund.

The Houston-based firm is targeting $3.5 billion with a $4.5 billion hard-cap for Quantum Energy Partners VII, according to 15 March meeting materials for Nebraska Investment Council.

Nebraska is voting at the meeting to make a $50 million commitment to this fund, as part of its $150 million private equity commitment pacing for 2017.

The documents showed Fund VII is offering a management fee discount to limited partners who commit within the first close, at 1.65 percent during the investment period. Otherwise, the fee is 1.75 percent during the investment period, and 1.5 percent for all LPs thereafter.

Other fund terms were standard to industry norms, at 20 percent carried interest and 8 percent hurdle rate.

It was not clear when Fund VII officially launched and plans to have a first close. Quantum was not available to comment.

Quantum has made a significant general partner commitment for the past six funds – though the amounts were unspecified – and uses an equity line of credit, according to a fund review document prepared for Nebraska by its investment consultant Aon Hewitt.

The fund will focus mainly on North American upstream oil and gas, and also on midstream oil and gas, power generation and oilfield services, making investments of $200 million to $500 million each, according to the documents.

Fund V, which closed on $2.5 billion in 2009, has deployed $5.8 million; 81 percent of which is in upstream, 13 percent in midstream, 2 percent in services and 3 percent in power.

Fundraising for Fund VII comes about a year and a half after the final closing of Fund VI on its $4.45 billion hard-cap in July 2015, as announced by Quantum. Park Hill served as the placement agent and Weil, Gotshal & Manges as the legal counsel for Fund VI, according to Quantum’s announcement.

Nebraska committed $30 million to Fund VI in 2014 and $20 million to Fund V in 2008, the Lincoln-based pension’s meeting materials indicated. The documents also showed that Fund V was generating a net internal rate of return of 17 percent and a 1.6x net investment multiple as of 30 September.

Other LPs in Fund VI included Canada Pension Plan Investment Board, Houston Municipal Employees’ Pension System, Massachusetts Pension Reserves Investment Management Board, San Bernardino County Employees’ Retirement Association and Alaska Permanent Fund, according to PEI data.

Quantum manages $11 billion in assets and has 30 investment professionals, led by the firm’s co-founder and chief executive Wil VanLoh.

Aon Hewitt listed EnCap Investments, Warburg Pincus, Riverstone, Kayne Anderson Capital Advisors, Denham Capital Management and Natural Gas Partners as some of Quantum’s competitors.