Company: KrisEnergy Holdings
Sponsor: First Reserve
Deal Value: $500 million
The deal highlights the attractiveness of increasing energy demands in Southeast Asia and also brings First Reserve into a working relationship with a management team the firm has pursued once before.
With leverage, KrisEnergy has buying power equal to about double First Reserve’s $500 million commitment, and the platform is “fairly advanced” in negotiating a number of deals, said Will Honeybourne, a managing director at First Reserve. Deals for the new platform may include acquisitions of pieces of companies and asset acquisitions in onshore and offshore oil and gas businesses in Southeast Asia, he added.
Greenwich, Conn.-based First Reserve was attracted to Southeast Asia thanks to the region’s continued economic growth, stable fiscal regimes, and ongoing energy infrastructure development. More importantly, the region’s energy demands are increasing at a faster pace than elsewhere in the world and Southeast Asia has more known-yet-underdeveloped basins than Europe and North America.
No stranger to Asia, First Reserve has made previous coal-related investments in companies based in China and Australia, and several of its portfolio companies have a presence in Asia, as well. “It is an area that we have knowledge of and would like, frankly, to do more in,” Honeybourne said. The firm acknowledges that the economic slowdown has affected the demand for energy, but it also contends that that has created buying opportunities. “If anything, it takes some of the generalist funds out of our sector,” he said.
KrisEnergy will be led by Keith Cameron, Chris Gibson-Robinson and Richard Allen, a team of industry professionals already known to First Reserve. Last year, the buyout shop expressed an interest in working with the trio when it was considering the acquisition of Pear Energy, an exploration and production company formed by the management team in 2000. First Reserve ultimately shied away from the deal as valuations for Pearl Energy got too rich, according to Honeybourne said.
But the firm left the door open for future collaboration with the team, and the relationship ultimately culminated into the formation of KrisEnergy. First Reserve’s attraction to the team stems from its highly developed pipeline of potential deals, Honeybourne said.
First Reserve has nearly $9 billion in dry powder to invest exclusively in the energy sector. The equity for KrisEnergy comes from First Reserve’s twelfth fund, a $9 billion pool that closed in April of this year. Like many of its mega-buyout peers, the firm adjusted its fundraising target to suit an unenthusiastic investing environment. The fund had initially targeted $12 billion, a considerable jump from its prior $7.8 billion fund. First Reserve received commitments from
In early September, First Reserve filed to take public Cobalt Energy, an independent oil exploration company that the firm invested $350 million in alongside Goldman Sachs,