The unlisted natural resources debt fundraising market has developed since the financial crisis, with 54 funds closing since 2010 raising a combined USD29 billion.
The most successful year of fundraising occurred in 2013 when 15 funds reached a final close, raising a combined USD11 billion; by comparison, five funds raised just USD0.5 billion in 2014, and nine funds closed in 2015 securing USD5.5 billion of investor capital. Since 2010, 79 per cent (USD23 billion) of investor commitments have gone to funds with a primary focus on energy; vehicles with a diversified approach saw the next highest amount of capital, raising a combined USD4.2 billion despite just three fund closures. Between agriculture, metals & mining and timberland strategies, 16 funds raised USD1.9 billion.
Geographically, the majority of capital secured by natural resources debt fund managers since 2010 has been committed to vehicles targeting investments in North America with 24 funds raising USD23 billion. Europe has seen the least investor capital with just USD0.8 billion raised while Asia-focused funds have seen an aggregate USD3.7 billion of commitments. Funds focused on areas outside of these regions have raised USD1.6 billion through 13 fund closures.
There are currently 32 natural resources debt funds in market, targeting USD23 billion in investor commitments. Firms tend to be either large alternative fund managers with experience in private debt, or energy-focused private equity firms.
Energy-focused funds make up the majority of natural resources debt funds in market and target capital, with 19 funds seeking USD15 billion of investor commitments. Three vehicles looking to invest in water are seeking USD2.8 billion, while diversified strategies are hoping to secure USD4.1 billion.
Despite low fundraising levels since 2010, six Europe-focused funds are seeking USD6.3 billion of investor capital. North America-focused funds have the most funds in market (17) and are targeting the greatest amount of capital (USD15 billion) with just one fund seeking USD0.1 billion looking to make investments in Asia. Outside of these regions, eight funds are looking to raise USD1.8 billion.
“Under pressure from increased regulation and capital requirements since the financial crisis, many banks have looked to deleverage and reduce their lending, creating more and more opportunities for fund managers to provide a range of financing options to natural resources companies,” says Tom Carr (pictured), head of real assets products at Preqin. “The continued growth of interest in debt investment in these companies will depend on the success or otherwise of the current group of funds and also on the direction commodity prices take. However, with regulation still affecting the ability of banks to address all the financing needs of natural resources companies, the next commodity boom will likely be financed, to an extent, by private capital.”
