Global buyout firm Trilantic Capital Management opened its second North American office in Texas last month. The office is led by Trilantic North America managing partner Chris Manning and Trilantic partner Glenn Jacobson. Manning, who is also Trilantic Energy Partners chairman, tells Private Equity International why it chose 2016 to open a Texas office to focus on energy investments and the firm’s future plans to expand its team.
Why did you decide 2016 was the time to open your Texas office?
Trilantic was previously a part of Lehman Brothers. We were talking about opening an office in Texas since we had been Lehman Brothers; this was not a new idea. With the Lehman bankruptcy, we spent some time buying our business from the estate and focusing on making prudent investments. We have looked into growing our energy business, which is a very capital-intensive one. The first step was raising our energy fund, which we started raising in 2014. The continued part of our growth strategy [in energy] was not just to have a fund, but have presence in Texas. It was not an if, but a when.
So we started looking at office spaces last year and ended up finding something to open it in May.
Is this part of a bigger trend of energy-focused firms moving to or opening locations in Texas?
We’ve definitely seen other firms doing that to focus more on energy, so it’s fair to say you’ve seen that trend. Some of the smaller mid-market firms in New York, for example, opened a Texas office, but some haven’t. You don’t have to have an office in Texas to be a successful energy investor. That being said, we do think we can do a bit more, be closer to some of our portfolio companies, be closer to some of our investors down there.
Will Trilantic be expanding in other ways?
As we plan to grow our energy business, we look to grow our team. We think, from a personnel perspective, having a presence in Texas will help us recruit. We’d just rather be in Texas. We’ve taken a conservative approach to deploying capital, but also in terms of how we grow our company and add head count. It’s very important to hire the right person since we’re a small company. We tend to spend a lot of time on the interviewing side, meeting people and getting to know them for a while, before we hire them.
What is your view of the energy space for 2016?
Energy GPs have raised a lot of capital. There are certainly a lot of investors [in energy] out there. A lot of investors put capital [to work] when oil price was at $40 [per barrel] versus $100. If you are optimistic that the US energy business is going to grow and commodity prices are moving up from here, you’d love to put money to the GP you trust.
I don’t think we’re done seeing restructuring in the sector. While it does feel like there’s been a nice rebound in commodity prices, we’re still at levels where there’s more [distressed] activity and projects that make sense today than at the beginning of the year. If I had to guess, we’ll continue to see them the next few months. But if prices continue going where they are, distressed may be in the rearview mirror. My guess is the future will tell us 2016 will have been a better year to invest in distressed debt strategies.