GTCR Launches Energy Data Platform

Target: ReSurge Ltd.

Price: $150 million

Sponsor: GTCR Golder Rauner

Legal Adviser: Sponsor: Kirkland & Ellis LLP

GTCR Golder Rauner recently entered the energy industry with a new platform company that its executives believe will see long-term benefits from the current struggles of under-capitalized companies in the sector. On June 2, the buyout shop launched ReSurge Ltd., a Calgary, Alberta-based company that will buy, sell and lease libraries of three-dimensional seismic data that energy companies use to explore for oil.

The Chicago-based firm created ReSurge in partnership with Ken MacDonald, a 35-year veteran of the seismic industry. Many energy companies hit hard by the recession have been selling portions of their libraries of valuable seismic data as a way to raise capital, Phil Canfield, a GTCR principal told Buyouts. Through ReSurge, the firm plans to buy these libraries and lease them back to the selling parties or make them available to other energy companies. The firm has committed $150 million of equity to the venture.

A few years ago executives at GTCR discussed teaming up with MacDonald, the co-founder and former CEO of Pulse Data Inc., a seismic data licensing company, to scout acquisition targets in the industry. The plan then was to use Pulse as a consolidation platform, which is the traditional GTCR buy-and-build strategy. But at the time, energy prices were high and valuations were overblown. GTCR was unable to come to terms with the Board of Directors of Pulse Data around an investment. In the meantime, MacDonald retired from Pulse Data while staying in touch with Canfield and his team. Ultimately, they decided they could create a new platform by buying data, rather than by buying an existing company in the industry. “We have created a model where we think we can generate pretty good returns on our capital just by reselling data and having good cash-on-cash returns,” Canfield said.

Down the road, GTCR could sell the company to a large strategic energy company. The firm typically targets internal rates of return in the 20 percent to 35 percent range.

The ReSurge investment grants GTCR entry into the energy industry, while the firm already has ample experience working with companies focused on data and licensing. The firm typically targets companies in industries such as business services and outsourcing, consumer products and services, health care, technology and transaction processing.

Equity for ReSurge comes from GTCR’s ninth fund, a $2.7 billion pool that closed in 2006. The firm has invested about one-third of the fund, Canfield said. The firm, which traces its roots back to 1980, currently manages $6 billion.

MacDonald will serve as CEO of ReSurge, and will be joined by CFO David Smiddy, who boasts a 27-year history in the Canadian oil and gas industry. Also joining the team is Andy Vernon, who, with 25 years of experience on the marketing side of the seismic data industry, will become vice president of sales and marketing at ReSurge.