Private Equity Energy Bets Burn Investors

The report finds that private equity energy funds have consistently underperformed broader private equity benchmarks, with many losing money. This is attributed to high bankruptcy rates among debt-laden private equity-backed oil and gas companies, a collapse in buyer demand for fossil fuel assets, and a global transition toward renewable energy. The document highlights that the COVID-19 pandemic accelerated these trends, leading to a 'structural shift' where fossil fuel demand is unlikely to return to pre-pandemic levels.

• Private equity energy funds have significantly underperformed compared to broader private equity benchmarks over the last decade, with the majority of sampled funds losing money.
• Private equity-backed oil and gas companies experienced a higher rate of bankruptcy in 2020 than non-private equity-backed firms, largely due to a capital structure that relies heavily on debt.
• Exit options for private equity fossil fuel investments have dwindled because publicly traded companies, previously the primary buyers, have a decreasing appetite for acquiring new assets.
• The shale boom strategy of creating value through technology failed to secure profitable returns, with drilling new wells becoming unprofitable for nearly all of the 500 private equity-backed explorers in the U.S. by 2019.
• Natural gas infrastructure faces significant risk of becoming 'stranded assets' due to the lower cost and reliability of renewables and higher-than-estimated methane leakage rates.
• Industry forecasts and oil majors suggest a permanent structural decline in oil demand, with peak production reached in 2019.

APA

Giachino, A. (2021). Private Equity Energy Bets Burn Investors. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2021/03/PE-Energy-Bets-Burn-Investors-PESP-March-2021.pdf

Chicago

Giachino, Alyssa. Private Equity Energy Bets Burn Investors. Private Equity Stakeholder Project, 2021. https://pestakeholder.org/wp-content/uploads/2021/03/PE-Energy-Bets-Burn-Investors-PESP-March-2021.pdf.

Wikipedia

{{cite report |last1=Giachino |first1=Alyssa |title=Private Equity Energy Bets Burn Investors |publisher=Private Equity Stakeholder Project |date=March 2021 |url=https://pestakeholder.org/wp-content/uploads/2021/03/PE-Energy-Bets-Burn-Investors-PESP-March-2021.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{giachino2021private, author = {Giachino, Alyssa}, title = {{Private Equity Energy Bets Burn Investors}}, institution = {Private Equity Stakeholder Project}, year = {2021}, month = mar, url = {https://pestakeholder.org/wp-content/uploads/2021/03/PE-Energy-Bets-Burn-Investors-PESP-March-2021.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }