The global demand for energy has sparked a shakeup in the energy sector. Corporate acquirers, specialist private equity groups and even the generalist financial buyers have crammed into the space seeking all things energy.
SCF Partners got into the game after the roller coaster ride of the 1980s that saw the cost of oil go from $15 a barrel in 1979 to almost $40 two years later, only to shoot back down to $10 a barrel in 1986. The decade ended with oil at around $20 a barrel and it was against this mountainous backdrop that the Houston-based SCF Partners launched its first fund out of investment bank L.E. Simmons & Associates.
It took the firm more than a year to raise $50 million for its first fund, with investors naturally skittish to back an oil-field services boutique. But after notching three successive victories through its initial investments, acquisitions of Hornbeck Offshore Services, Grant Geophysical and Wheatley TXT Corp., investors gradually fell in line.
By 1991, the firm was able to raise $90 million for its second fund, and by 1998, SCF was able to corral $500 million for fourth fund. The firm’s latest fund, its sixth, is a step back from its fourth effort, but at $391.7 million, according to Securities and Exchange Commission filings, the new fund is still significant.
The firm has a fairly wide range in which it will invest. On its Website, SCF identifies that it seeks to buy companies with equity capital needs of between $20 million and $100 million.
The private equity thirst for energy has only gotten bigger in recent years. SCF is joined by a number of dedicated energy firms, including First Reserve Corp., FE Clean Energy Group, Energy Investors Funds, Merit Energy Co., and others.
On top of the specialist firms, the energy space has welcomed a number of generalist groups into its realm. The potential sale of Royal Dutch Shell PLC’s liquefied petroleum gas demonstrates this with names such as Texas Pacific Group, Blackstone Group, Bain Capital, GS Capital Partners and CVC Capital among those interested in the assets.
Calls to SCF were not returned by press time.