Warburg invests $600m in African oil and gas

The firm has backed the former CEO of oil company Cairn India to lead an African-based oil production company a month after closing its $11.2bn Fund XI.

Warburg Pincus has agreed its second Africa-focused deal, investing $600 million to help establish Delonex Energy, an energy exploration energy company focused on Central and Eastern Africa. It previously invested in Kosmos, a Texas-based international oil production company focused on emerging and frontier basins offshore West Africa and South America, in 2004.

Led by Rahul Dhir, former chief executive of oil company Cairn India, Delonex is focused on leveraging technology, execution and market access to discover, develop and commercialise hydrocarbons, according to a statement that noted Dhir and Warburg have worked closely together in the last few months to formulate Delonex’s business plan.

“The team has pioneered innovative applications of technology and brings a strong focus on disciplined execution and low-cost operations. Along with their knowledge of Africa and a successful track-record in similar basins around the world, we believe the team is well positioned for exploration success in Central and East Africa,” Somit Varma, a managing director at Warburg, said in the statement. 

Backing a trusted executive to create a new platform isn't a new strategy for Warburg; the firm frequently works with 'executives in residence' in various industries who they may later back to run a business. That was the case with Dhir and Delonex and was also the firm's approach to recent deals including Venari Resources, for which Warburg backed Brian Reinsborough, a former chief executive of Nexen Petroleum U.S.A and Crowdstrike, where Warburg worked with former McAfee chief technology officer George Kurtz. 

The investment was made from Warburg Pincus Private Equity XI, an $11.2 billion fund which held a final close last month.