Private capital tracker Preqin says in an update that contrary to expectations, 2018 was another bumper year for the industry, particularly for natural resources investments.
Fundraising by unlisted funds for investment in natural resources – oil and gas, timberland, farmland, water and mines – set a fresh record in 2018 and is likely to top $100 billion for the first time.
Although significantly fewer funds closed in 2018 compared to the previous year, $93 billion in total capital was secured for investment in the sector. Preqin expects this to rise by up to 10 percent as more data come in.
After a dismal 2017, capital raised for investment in mining and metals was also up significantly compared to last year, but still makes up only a small percentage of natural resources private capital.
The energy market has typically dominated natural resources, which may be an impediment to the long term success of the asset class
Preqin’s analysis show energy-focused funds (really only oil and gas as investments in coal have dried up) accounted for almost all of the year’s activity as 77 funds raised $89 billion. The vast majority of these funds target North American oil and gas plays.
By comparison, just four metals and mining funds closed and raised $2.5 billion. Encouraging for the sector is that over half (57 percent) of natural resources funds exceeded their targets in 2018, “indicating that investor appetite outstripped fundraising capacity,” says Preqin.
“The energy market has typically dominated natural resources, which may be an impediment to the long term success of the asset class: although other sectors are less crowded with competing fund managers, they also see less attention from investors and so struggle to grow,” says Patrick Adefuye, head of real assets at the London-based firm....MORE