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Alternative Market Briefing

Natural resources industry struggles to generate momentum: Preqin

Monday, July 08, 2019

Laxman Pai, Opalesque Asia:

The natural resources industry has been struggling to generate momentum for some time.

The natural resources fundraising hit a five-year low in Q1 2019, and Q2 has struggled to regain momentum, said Preqin in its Quarterly Update.

Just 15 funds closed in the quarter, on par with the 19 that closed in Q1 but behind the 24 funds closed in Q2 of last year.

In fact, the number of funds closed quarterly has been broadly in decline since Q2 2017.The capital raised by these funds was also sharply down.

Q1 saw a spike in fundraising, rising to $24bn, but Q2 recorded just $4.3bn in capital totals. This is a question of some concern for the industry: with both the number of funds closed and the capital raised seemingly in long-term decline, the future health of the asset class is uncertain.

As ever, energy funds accounted for the bulk of fundraising: eight vehicles focused on the sector raised $3.3bn.

Five agriculture funds closed - a comparatively high quarterly total for the strategy - but fundraising amounted to only $1.0bn. Two metals & mining funds raised a combined $0.1bn, while no timberland or water funds closed in the quarter.

The unlisted natural resources market remains very crowded, with managers bringing new funds to market more quickly than they are being closed.

At the start of Q3 2019 there are 307 funds seeking a total of $208bn from investors - figures very similar to the first quarter of this ......................

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