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Firm has invested $9 billion in energy thus far

Warburg Pincus, a private equity firm with $40 billion under management in 120 companies, announced this week that it has successfully raised its latest fund. The new fund, called the Warburg Pincus Private Equity XII, L.P., received third party commitments in excess of its $12 billion hard cap, the company said in a press release. The new fund is the largest that the firm has conducted since before the financial crisis.

The new fund includes public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundations and high net-worth investors, according to Warburg Pincus. The firm said that it received “considerable participation” from investors outside the United States.

The private equity firm said that it will use the Warburg Pincus Private Equity XII to build companies—in conjunction with management teams—in five key industry sectors:

  • energy,
  • financial services,
  • healthcare and consumer,
  • industrial and business services (IBS),
  • technology, media and telecommunications (TMT).

Energy

According to the firm’s website, Warburg Pincus has committed over $9 billion across more than 50 energy investments in upstream, midstream, downstream and oilfield services globally. The firm has also invested in power generation and transmission and renewable energy.

The company’s investments in the energy sector represent its third-largest area of commitment among the five on which it said the new private equity fund would focus. Its investments in TMT total more than $15 billion, while the firm has put forward more than $12.5 billion in commitments in the healthcare and consumer sector.

Co-Chief Executive Officer Joseph P. Landy said in a statement that they firm looks for “unique companies across sectors and geographies.”

Private equity is what makes this cycle different

The strength of private equity is one of the main differences in the current down cycle compared to the crash in the 1980s, according to David Preng, president and chief executive officer of Preng & Associates. “Private equity is currently looking into the market, and [Private Equity firms have] about $80 billion of unlevered capital,” Preng told Oil & Gas 360®.

Speaking at EnerCom’s The Oil & Gas Conference® 20, Energy Group Advisor with Warburg Pincus Cameron Smith told the audience that the firm was “very comfortable” with the risks associated with the energy industry, and that Warburg Pincus likes to grow companies through commodity cycles.

Warburg Pincus Investing Through Downcycles

Smith said the firm’s comfort with investing through cycles help to set it apart from other private equity firms. Smith pointed out that during the course of the last three downturns, Warburg Pincus has invested more than $3 billion. “Because of this contrarian approach, we are pleased to say we do not have any problems in our portfolio,” Smith said to the audience in August.


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