The EIG-managed investment fund Gateway sets new date for HK listing
Investment fund managed by EIG aims to raise US$200 million next year after poor market conditions forced it to change plans last March
Gateway Energy & Resource Holdings, an investment fund managed by the Asian arm of US private equity firm EIG Global Energy Partners, is aiming to list in Hong Kong and raise around US$200 million in the second quarter next year after poor market conditions saw it pull the planned listing last March.
Although global stock markets have gained in the past few months on the back of speculation that the European and US central banks would provide more liquidity into the market by buying large amounts of government debt, Blair Thomas, chairman of both EIG and Gateway, said choppy market conditions would remain.
"We don't think the market will have sustained momentum until the end of the year … we think we are going to stay in choppy markets through the first half of next year," he said in an interview.
Washington-based EIG is one of the world's most established energy and related infrastructure-focused private equity fund management firms, with 30 years of experience investing in the sector. Some US$10.6 billion of funds managed by it are invested in 260 energy firms and projects in 33 nations.
In 2007, it founded Gateway, a fund that only accepts investments from institutional investors and had US$187 million of assets at the end of September. Gateway is listed on GSTrUE, a private exchange managed by Goldman Sachs. By listing in Hong Kong, its shares can be traded by retail investors as long as the minimum size of each trade is HK$500,000.
Thomas said the bond-buying by the European Central Bank and the US Federal Reserve was "disruptive market intervention" that would create asset bubbles and misallocate capital.
"The consequences of those actions will be borne over the next five years," he said. "The artificial lift of the stock market from these actions is not sustainable."
Still, he said the equity market downturn between the middle of last year and this year had created investment opportunities for private equity firms like EIG, which had spent US$2 billion on companies and projects over the past nine months.
Much of the US$2 billion was invested in offshore Brazil oil projects and unconventional North American oil projects, such as oil trapped in shale rock formations and dense oil that is mixed with sands. Such oil has only been economically extracted and refined in larger scale in the past decade due to technological advances and higher oil prices.
EIG last year raised US$4.1 billion for its Energy Fund XV fund. Thomas expects to raise at least another US$4 billion for its Energy Fund XVI fund next year. Investors in EIG funds are primarily pension funds, insurance firms and sovereign wealth funds.
China Investment Corp has an undisclosed small stake in EIG and is a major investor in funds managed by EIG.
