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Denham, like many energy GPs, eyes liquidity process for older fund

  • Denham works to sort out 2005 fund
  • Many energy GPs seek liquidity processes for older pools
  • Denham split into three strategies

Denham Capital is working on a liquidity process for its fourth fund, which was the first institutional fund the firm raised, sources told Buyouts.

Many energy-focused private equity firms, especially those that focus on oil and gas, have explored potential liquidity processes, sources said.

These GPs would like to find ways to hold on to assets longer — especially as oil prices improved over the past year — while allowing LPs in older funds to exit the funds.

Denham is working with Lazard on the process, sources said.

Denham Commodity Partners IV had about $1.24 billion in 2005, an investment report from San Diego County Employees Retirement Association shows.

The firm spun out of hedge fund Sowood Capital and became independent in 2007, retaining about $2.3 billion formerly managed by Sowood.

It’s not clear how much of that went into Fund IV, which does have external investors. About 94 percent of Fund IV investors re-upped into Fund V, according to the San Diego County investment report.

It closed its fifth fund on $2 billion in 2008 and raised $3 billion for its sixth fund in 2012.

Rather than raise a seventh flagship fund, Denham in 2015 began the process of splitting its business into three distinct strategies: oil/gas, mining and power. The firm planned to bring three funds to market for each strategy.

Earlier this year, Denham closed its first mining fund on $558 million. The mining fund is led by Managing Partner Carl Tricoli as well as Managing Directors Bert Koth and Rob Still.

Denham Oil & Gas Fund was targeting $2.5 billion, according to an SEC Form D filing from 2015. That fund had raised $657.6 million as of 2016, but it’s not clear whether the pool held a final close. Oil & Gas is led by Founder and CEO Stuart Porter and Managing Partners Jordan Marye and Tricoli.

Finally, Denham International Power collected about $316.4 million as of earlier this month, according to a Form D filing. Power is led by Porter, Managing Partner Scott Mackin and Partner Justin DeAngelis.

Other energy firms that have turned to the secondary market include Panda Power, which was considering some sort of liquidity process last year, Buyouts previously reported.

First Reserve attempted a huge restructuring process in 2016 on its $7.8 billion 11th fund. That was derailed after limited partners in the fund chose not to sell their interests, causing the buyers, Pantheon and ICG, to walk away from the deal.

Action Item: Check out Denham’s Form ADV: https://bit.ly/2Qo607O