_FUNDRAISING

Oil Money is Going Green

Here at Buysiders we aren’t in the business of giving you political takes, but there is some interesting news coming out of COP28 that the finance world needs to be aware of.

Over the front half of December, representatives from far and wide descended upon Dubai to coordinate the global climate plan for 2024. The UAE came out swinging with the announcement of a new fund called Alterra that is exclusively focused on climate.

Why does that matter? Well, its first fund is a cool $30Bn and the UAE plans to deploy $250Bn by the end of the decade (so in 6 years…). This fund will be managed by the Abu Dhabi royal family through their Chimera Investment group and a new fund called Lunate Capital, which secured $50Bn of seed funding earlier this year.

This fund is taking a two pronged approach to asset management. First, the Alterra Acceleration fund will allocate $25bn to institutional strategies, and Alterra Transformation will allocate a meager $5Bn to risk mitigation focused on Emerging Markets in Asia, Africa and LatAm.

The institutional side is where this gets interesting. $3Bn is going to Brookfield split $1Bn for its Catalytic Transition Fund and $2Bn for its second Global Transition Fund. Blackrock will receive $2Bn for its Climate Transition private credit fund and other climate-focused infrastructure investments. TPG will receive ~$1.5Bn for its second Rise Climate Fund.

Now the big irony in all of this is the UAE is so rich exclusively because of oil. While they have begun to look at diversifying away from the oil business, the UAE is receiving some flak for using Alterra as a way to provide it some cover while it continues to generate significant wealth off of its oil & gas portfolio.

If you think I am just pontificating from the cheap seats, the Chairman of Alterra and the President of COP28 is the CEO of the Abu Dhabi National Oil Company, so it’s safe to say they know who holds the power here.

All of that being said, it is unlikely that any of the US PE Funds that received this capital - or their LPs - care even remotely that it is likely just a shill for the UAE. They will be laughing all the way to the bank, and frankly, we probably would too.

_{PRESENTED BY MAG CAPITAL PARTNERS}

Investors: Follow This $2.4T Breadcrumb Trail

While most investors toe the line with standard markets, the savvy among us have zeroed in on what some experts call “the backbone of the American economy.”

Welcome to Industrial real estate (IRE). 

The global supply chain disruption of 2020 revealed a clear need for domestic manufacturing solutions, fueling massive demand in the US. 

While inflation riddled other sectors, IRE remained resilient, delivering instant cash flows, inflation protection, and asset appreciation for investors. 

But here’s the kicker: Not all IRE investments are the same. MAG Capital Partners have over 50 year’s experience of accessing off-market investments that deliver consistent yields (while minimizing risk).

Don’t wait–unearth the industrial real estate market with MAG Capital Partners today.

_{DEAL OF THE WEEK}

Big Oil is Back (Again)

G’day mates - coming at you with some news from down under today. Australian energy giants Woodside and Santos are in the early days of discussions around consolidating their massive footprints.

Santos’ shares jumped as much as 11% on Friday when it announced that it was in talks with Woodside. The combined company could be worth ~$52Bn depending on your exchange rate.

This is all well and good, but taking a break from our typical number crunching, there are a few key deal considerations you have to think about in mergers like this one.

The first one is the antitrust concerns. Given that Santos and Woodside are two of Australia’s largest oil & gas firms, there is an almost certainty that domestic asset sales will be required by the Australian government to overcome any competition bureau concerns.

The combined company would control ~26% of Australia’s east coast gas market and ~35% of Western Australia’s gas market, and effectively consolidate Australia’s entire liquified natural gas market (a bet a lot of oil companies are making in the energy transition), which would help the longevity of Woodside and Santos as they fight an uphill battle in a market that is brutalizing sub-scale players. For reference the combined companies will still produce less than a quarter of what Shell does in a year.

Now that Santos is effectively on the market, the next logical questions are (1) will Woodside be willing to pay up and (2) will anyone else throw their hats into the ring.

The answer to the former is a strong maybe. The deal could generate around ~$200 million of cost savings for the pro forma entity, but there is no indication that Woodside would be willing to pay the likely premium required to consummate the deal.

If you are asking yourself why this is so important here, its important to look at the trading history for these firms. Both Santos and Woodside have significantly underperformed the rest of the oil & gas space, so the Santos shareholders - who have been disappointed with performance to date - are likely going to require a healthy premium to feel like they’re not being taken advantage of.

Both Woodside and Santos have underperformed the likes of Exxon and Chevron, so it is not unreasonable for both sets of shareholders to be wondering what the right price for a deal is here.

Onto the latter, the answer is a definite yes. Woodside is massive, but many European oil & gas majors also want to get their hands on the Australian gas market. While these guys may pay less, they have the distinct advantage of not raising much antitrust concerns, and no asset sales will likely be required following the deal.

This deal follows a flurry of M&A in the Australian O&G space, particularly by Woodside and Santos. Woodside bought mining major BHP’s oil & gas business last year and Santos bought Oil Search in 2021. This deal would complete the consolidation of Australia’s four largest domestic oil & gas producers.

_{EXIT OF THE WEEK}

Ares Aims for a Home Run

Sportsology Capital Partners and Ares Management have entered exclusivity to buy a 10% stake in the MLB’s Texas Rangers from Janice Simpson.

Janice Simpson and her (now ex) husband - who owns a separate stake in the team - were a part of the consortium led by energy magnate Ray Davis who acquired the team out of bankruptcy in 2010.

Ares and Sportsology are valuing the team at a comfortable $2 billion, not bad for the 2023 World Series winners.

Ares, who should be going after the Dodgers based on its LA roots, recently raised $3.7Bn to deploy in sports, media and entertainment, so it has significant dry powder to spend here. Sportsology is run by Mike Forde (a former executive at Chelsea F.C.) and John Caroll, a long-time PE vet, so its safe to say that this 10% stake is in good hands.

This deal comes after a rush of capital into the sports space across the globe. A few high-profile examples: Clearlake Capital co-owns Chelsea F.C., Dynasty Equity owns a minority stake in Liverpool F.C., Silver Lake owns a minority stake in New Zealand Rugby and there are many others.

As a piece of finance world lore, this is not Ares’ first soiree into the sporting world. Au contraire, Ares founder Tony Ressler - also credited as one of the co-founders of Apollo and brother-in-law to none other than Leon Black - put together the consortium to acquire the Atlanta Hawks NBA team back in 2015.

As with all deals and sporting events, it ain’t over till it’s over, but we hope that Ares can keep the Rangers’ streak alive, or at least, hope they perform better than the Hawks.

_{NEWS ROUNDUP}

Top Reads

• SocGen back in the market to sell its UK private bank

• Qatar Sports and Arctos Partners agree to deal for Paris Saint-German

• Velocity Capital acquires Parella Motorsports

• SpaceX value jumps closer to $180 billion in tender offer

• KKR seeking up to $7Bn for inaugural climate fund