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Carlyle continues natural resources push with $424m NGP Energy deal

20 Dec 2012

Global buyout giant Carlyle has continued its recent push into natural resources by buying a 47.5 per cent revenue stake in NGP Energy Capital Management, a Texas-based energy investor with $12.1bn in assets under management.

The Nasdaq-listed firm has agreed to pay $424m for Barclays Natural Resource Investments’ (BNRI) 40 per cent stake in the business and the 7.5 per cent interest held by NGP’s management.

NGP will serve as the cornerstone of Carlyle’s growing natural resources investing platform, which includes energy mezzanine financing, energy infrastructure & power generation through Cogentrix, and commodities, through Vermillion.

NGP’s current and recent former investments in companies that are now publicly-traded include Energy Transfer Equity, Energy Transfer Partners, Eagle Rock Energy, Memorial Production Partners and Resolute Energy Corp.

“Carlyle is systematically strengthening our global natural resources investing platform and NGP is an important part of this effort,” Carlyle co-CEO and CIO William Conway said in a statement.

“NGP’s investing excellence in the US oil & gas, midstream and oilfield services sector, coupled with our established capabilities in commodities, power generation, mezzanine financing and most recently, refineries, allows us to take full advantage of the energy revolution sweeping America.

“This partnership enables our respective investors to pursue opportunities across the energy spectrum.”

NGP has completed 220 transactions since inception in 1988, resulting in cumulative invested capital of $6.6bn with total enterprise value of $36.1bn across a range of energy and natural resource assets, including oil & gas resources, oilfield services, pipelines and processing.

Other investment mandates include food, agriculture, water resources and services, energy efficiency, power tech and alternative energy.

The firm’s 70 professionals in five offices manage $12.1bn across eight funds.

The deal, which will be funded with cash and Carlyle Holdings partnership units, also includes a right to buy an incremental 7.5 per cent revenue interest, which would bring Carlyle’s total revenue interest to 55 per cent.

It also includes a right to 7.5 per cent of the carried interest in all future funds, as well as options to acquire BNRI’s 40 per cent stake in the carried interest in NGP Natural Resources X, the firm’s current flagship fund, and all future NGP funds.

Carlyle has also agreed to pay the sellers additional consideration during 2015 to 2018, contingent upon NGP achieving certain business performance goals.

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