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Apollo veteran Sam Oh’s Mountain Capital raises most of Fund II’s $650m target

Oh, a former Apollo senior partner, founded Mountain Capital to be a control investor in complex situations and turnaround opportunities in the oil and gas industry.

In a brutal market for energy private equity fundraising, Mountain Capital is close to wrapping up a second growth and turnaround offering.

Mountain Capital Partners II, launched for marketing in late 2019, collected about $500 million, a person with knowledge of the matter told Buyouts. That puts the fund within reach of its target, set by the Houston firm at $650 million, two people said.

Founded in 2015 by Sam Oh, a former senior partner with Apollo Global Management, Mountain Capital raised its debut fund two years ago. Fund I brought in about $646 million, according to a Form D fundraising document. It was anchored by a commitment from Harvard University’s endowment, the Denver Post reported in 2016.

Montana Board of Investments is among Fund II’s limited partners, committing $30 million.

Oh was a founding member of Apollo’s private equity natural resources group, Mountain Capital’s website showed. He participated in several major oil and gas investments, such as Athlon Energy, formed in 2010 with Apollo’s backing and sold in 2014 to Encana for $5.93 billion, excluding debt. Oh was an Athlon director.

Before joining Apollo in 2008, Oh led principal investments for Morgan Stanley’s commodities group.

Oh leveraged this background in his creation of Mountain Capital. The firm focuses on a broad range of mid-market energy opportunities, partnering with management teams operating in select North American basins, its website showed. Unlike many energy PE firms, it functions like a buyout investor, acquiring control stakes in companies. Typical investment sizes are $50 million to $150 million.

Mountain Capital is particularly interested in complex situations that require significant industry knowledge and a specialization in growth and turnaround investing. Using networks to source deal flow, it has built a concentrated portfolio of mostly upstream businesses.

Mountain Capital’s recent deals include this year’s buy of Jones Energy, an Austin developer and acquirer of oil and gas properties in the Anadarko basin. The purchase price was about $202 million. Jones, which emerged from bankruptcy in 2019, was combined with portfolio company Revolution Resources.

Opportunity in a time of crisis

The oil and gas industry is facing unprecedented challenges due a supply glut worsened in early 2020 by the Russia-Saudi Arabia price war. On top of this, measures taken to halt the spread of covid-19 eroded fuel demand. This has prompted severe financial disruption for energy businesses, resulting in a rising number of insolvencies and bankruptcies.

Energy PE firms are also facing headwinds. Fundraising has been in decline globally since 2014, PEI data showed. Activity weakened further last year, with 39 fund closings securing $28 billion, the lowest amount in more than a decade. This trend continued in the first half of 2020.

Mountain Capital appears to be persevering, headwinds notwithstanding. This fact plus the firm’s strategic focus on complex situations and turnarounds suggest it could play an important role in today’s deal environment.

Oh, Mountain Capital’s president and CIO, leads a team that includes managing directors John Wehrle and Raymond Wong and principal Matthew Jankovsky.

Wehrle, a former senior executive with Chaparral Energy, also worked in Apollo’s natural resources group. Prior to joining Mountain Capital, Wong was co-head of Wells Fargo Securities’ energy acquisitions and divestitures team, while Jankovsky was an associate with Blackstone Energy Partners.

Mountain Capital declined to comment on this story.

Action item: Check out Mountain Capital’s ADV filings here.