Ridgewood Fund III closing exceeds $1.9bn

The firm has exceeded its $1.5 billion target with strong support from second fund investors.

Ridgewood Energy has closed its third private equity fund at more than $1.9 billion, according to a statement by the Texas investment firm.

Ridgewood Energy Oil & Gas Fund III, which began marketing in November, attracted roughly two thirds of the capital in the new fund came limited partners that committed to its second fund, Ridgewood Energy senior managing director Bob Gold told Private Equity International. These included state retirement systems, corporate pension plans, university endowments, foundations, private wealth managers and family offices.

“The reason the fundraising happened so quickly is because we got tremendous support from our Fund II investors,” Gold said, adding that the fundraising team told the market that the fund raising would not be open for long. “We set realistic closing dates and they responded,” he said. 

Among investors in the fund was the Teachers Retirement System of Texas that committed $250 million, according to PEI's Research & Analytics division. 

The fund will typically invest between $50 million to $100 million to support oil drilling and production projects in the deep water off the Gulf of Mexico, generally in areas that yield 20 million to 70 million barrels of oil, according to Gold.

Gold said that the drop in oil prices has benefited Ridgewood as public companies have cut back on exploration and production activities and the cost of exploration activities has also fallen. Dislocation in the energy market has also provided an attractive market for energy investors to sell their production operations when exiting an investment, he noted. 

Connecticut's Eaton Partners served as placement agent for the third fund, while Vinson & Elkins provided counsel.
Ridgewood closed its second fund at $1.1 billion above its initial $750 million target in 2014.