1) What was your biggest challenge at Allstate Investments?
That challenge was anticipated, and it was that we were implementing a cultural transition within an insurance company. The investment company there had been predominantly about liquid debt strategies, and we took them into illiquid equities. The infrastructure and real asset program was over $1 billion in assets by the time I left to join Ridgewood Private Equity Partners. We were making all the same kinds of investments there that we’ll be making at Ridgewood. That includes LP commitments, which will account for about half the money we deploy, along with co-investments and direct investments on our own.
2) Can you share more about the investment strategy you’ll be pursuing?
The investment strategy is based on industry fundamentals. Within the United States there have been huge technological advancements that have created transformational change. The International Energy Agency expects $200 billion per year of ongoing capital spend through 2035. That’s just in the United States. There’s a huge fundamental need for investment capital, unlike almost any other sector within private equity that I’ve seen throughout my career. That’s a very compelling investment backdrop. We will either be finding best-of-class managers to back or individual management teams executing on business strategies. We will invest across the value chain—upstream, midstream and downstream—in the production of oil, natural gas and other areas. Part of the wonderful benefit of doing this as part of Ridgewood Companies is that the firm has 30-plus years of experience being a direct private equity energy investor.
3) What are some specific opportunities in energy that you like?
We start with a thematic approach. Among upstream opportunities an example would include large asset-rich corporate owners who are rationalizing holdings and either selling assets that have been non-core or less core and bringing in partners from the industry who have the capability to pursue an operating strategy for those assets. For several years those corporate owners were out there acquiring acreage. Now they’re turning to building and operating assets and they need the capital to do it. Another example of an upstream opportunity is taking advantage of advanced technology that allows for the ability of producers to operate in multiple zones from one well. They can go deeper and they can go horizontal using advanced technologies. In midstream we have the opportunity to build greenfield assets. As there’s been increased production there needs to be associated midstream assets like storage facilities and pipelines built to go along with that production. De-bottlenecking is another midstream opportunity. As production increases companies need to ensure they can get product out of a basin. There are bottlenecks to clear as there would be in any kind of extraction or production activity.
4) How much money will you deploy?
I can’t comment on fundraising. What I can share is that our investors—ultra-high-net-worth investors, family offices, institutional investors—have supported the direct energy private equity investing that Ridgewood Companies has executed for over three decades with capital and commitments of more than $4.5 billion. Investors want the alpha that’s proven over a long period of time to be available in energy private equity.
5) How many executives do you have and will you be hiring?
We’ve had great conversations in the market with attractive candidates. People are excited about what we’re creating at Ridgewood Private Equity Partners and the investment opportunity in energy private equity. I have an existing team and we’re going to build and augment it, to five to six professionals initially. We’ll assess our needs at that point and go from there.
Editor’s note: This Q&A was edited for clarity