Quantum Energy offers first-close discounts on Fund VII

Quantum Energy Partners is offering limited partners who participate in its seventh flagship fund’s first close a discount on its management fees, Nebraska Investment Council documents show.

LPs who participate in the first close will pay a 1.65 percent management fee during the fund’s investment period and 1.5 percent afterward, a memo prepared by Nebraska staff says. Other LPs will pay a 1.75 percent management fee during the investment period and a 1.5 percent fee afterward.

Firms occasionally offer discounts to LPs who participate in first closes to spur early fundraising commitments. Quantum Energy Partners set a $3.5 billion target with a $4.5 billion hard cap for Quantum Energy Partners VII.

At its hard cap, Fund VII would just surpass the $4.45 billion the firm raised for its previous fund, which held a final close in mid-2015.

Fund VI was netting an 89 percent internal rate of return through Sept. 30, 2016, according to Nebraska documents. Fund V, a $2.5 billion 2009 vintage vehicle, was netting a 17 percent IRR as of that date.

Nebraska is an LP in both funds and considers them top-quartile vehicles, according to the memo.

Quantum Energy Partners will invest Fund VII in energy assets, focusing primarily on upstream oil-and-gas assets. Earlier this year, portfolio company Sentinel Peak Resources said it acquired California oil-and-gas assets held by Freeport-McMoRan.

The firm did not respond to a request for comment.

Nebraska’s investment council, which oversees the portfolios of 33 investment pools in the state, approved $50 million for the fund at its March 15 meeting, State Investment Officer Michael Walden-Newman said.

Should Nebraska finalize the commitment and receive its full $50 million allocation, the system will have allocated a third of the $150 million it planned to commit to PE this year.

As of Dec. 31, Nebraska had a 4.6 percent allocation to PE, less than half a point off its 5 percent target allocation, an Aon Hewitt report included in the meeting materials shows. The portfolio has delivered a 2.6 percent return since its inception.

Action Item: More about Quantum Energy Partners: www.quantumep.com

A Canadian Natural Resources pump jack pumps oil out of the ground near Dorothy, Alberta, on June 30, 2009. ©Todd Korol/Reuters