Global alternative asset manager The Carlyle Group [NASDAQ: CG] said Dec. 20 that it has acquired a 47.5% revenue interest in NGP Energy Capital Management, an Irving, Texas-based energy investor with $12.1 billion in assets under management. Carlyle will pay, at closing, $424 million to acquire Barclays Natural Resource Investments’ (BNRI) 40% stake and 7.5% from NGP’s management. The transaction, which will be funded with cash and Carlyle Holdings partnership units, closed Dec. 20.
The transaction also includes: a right to purchase an incremental 7.5% revenue interest, which would bring Carlyle’s total revenue interest to 55%; 7.5% of the carried interest in all future funds; and options to acquire BNRI’s 40% interest in the carried interest in NGP’s current flagship fund (NGP Natural Resources X, LP) 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.
Carlyle co-CEO and chief investment officer William E. Conway Jr. said, “Carlyle is systematically strengthening our global natural resources investing platform and NGP is an important part of this effort. NGP’s investing excellence in the US oil and 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 CEO and co-founder Kenneth Hersh said, “Our strategic partnership with Carlyle enhances our ability to serve current and future investors. Our current NGP investors will continue to be served tirelessly by NGP’s extensive energy expertise, but they will now also benefit from Carlyle’s global reach, knowledge of debt financing and capital markets, and its extensive network, which complements our own.”
Hersh continued, “This relationship has tremendous long-term benefits. With this transaction, we have facilitated the sale of Barclays’ minority interest in our firm to a strategic partner, and carefully structured the contingent future payouts to favor NGP’s next generation of leaders, thereby providing substantial incentives for everyone to achieve high levels of performance over very long periods of time. Importantly, we did this all without disrupting in any way our current operations or governance structure.”
Daniel A. D’Aniello, Carlyle’s chairman and co-founder, said, “NGP has a proven team, a strong 24-year track record of performance across cycles and is a great cultural match. Our respective teams complement each other in so many ways, positioning both NGP and Carlyle to deliver even better outcomes for our investors.”
Established in 1988 by Ken Hersh and his partners, NGP Energy Capital Management has successfully completed 220 transactions, resulting in cumulative invested capital of $6.6 billion with total enterprise value of $36.1 billion across a range of energy and natural resource assets, including oil and 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 $12.1 billion across eight funds.
NGP will serve as the cornerstone of Carlyle’s growing natural resources investing platform, which includes energy mezzanine financing, energy infrastructure, and power generation (Cogentrix), and commodities (Vermillion).
Among many others, certain of 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 Corporation.