Riverstone Holdings is setting up an energy debt fund to take advantage of the dislocations roiling the markets as the price of oil continues to sink, according to three people with knowledge of the effort.
Riverstone, which is out raising its sixth flagship fund targeting $7.5 billion, is expected to hold a call with potential LPs in the next few weeks to provide details of the energy credit fund, according to one of the sources, an LP. Another source said the firm may prefer to close fundraising on the flagship vehicle before launching the credit-focused fund.
The target amount of the energy credit vehicle is not clear. Jeffrey Taufield, a spokesman for Riverstone, declined to comment.
The fund’s exact focus also is not clear, though the LP said the vehicle will invest in energy opportunities that are a “direct consequence of the constrained access to capital.”
Riverstone’s energy credit fund has been expected since the summer, when the firm hired Christopher Abbate, Daniel Flannery and Jamie Brodsky to launch the strategy. Abbate joined as a managing director from Citigroup, where he was a managing director and head of energy leverage finance.
Both Brodsky, who joined as a managing director, and Flannery, who joined as a vice president, came to Riverstone from Nomura Securities International.
The team was slated to focus on making credit investments from the Riverstone platform and advise Riverstone portfolio companies and third-party clients on capital structure issues, the firm said in a statement in July announcing the new hires.
“The team will not only broaden Riverstone’s focus to include investments in energy and power-related credit investments, but will also complement the activities of our buyout professionals,” the firm’s co-founders, David Leuschen and Pierre Lapeyre, said in the statement.
The collapse of oil prices has caused the “door to slam shut” in equity capital markets for energy ventures, Buyouts previously reported.
Crude oil futures fell to $46.52 for WTI Crude, the benchmark used in the U.S., on Jan. 22.
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