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Alternative Market Briefing

Natural resources fundraising crosses $100bn in 2019 but number of funds down

Tuesday, January 14, 2020

Laxman Pai, Opalesque Asia:

Natural resources funds closed in 2019 secured $109bn, on par with the $107bn raised in 2018. But the number of funds closed that focus exclusively on pure natural resources strategies is falling.

A total of 128 vehicles closed through the year, down from a peak of 184 in 2017 and 149 that closed in 2018.

Preqin said that high capital totals have been driven by the closure of several mega-funds which will allocate a portion of their capital to energy investments.

"This sets the scene for an extremely challenging fundraising market in 2020 - there are 318 vehicles seeking capital at the start of the year, the equivalent of almost two and a half years' supply at 2019 levels," it said.

This total is down from a year previously, suggesting that some fund managers are choosing to abandon their fundraising processes without reaching a final close, or that funds that do close are not being replaced by new vehicles coming to market.

Patrick Adefuye, Head of Real Assets said: "Strong headline totals for the natural resources industry in 2019 have masked an extremely challenging landscape. The success of mega infrastructure funds which intend to make some acquisitions in the energy space have bolstered capital totals, but the number of pure natural resources funds being successfully raised has fallen year-on-year since 2016."

Patrick added: "The fundraising market has fallen below replacement rate, as fund managers ......................

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