A $2 billion private hedge fund is now worth pennies

As per WSJ’s report, Houston-based EnerVest Ltd stands out because only 7 private-equity funds worth more than $1 billion have ever lost money for investors.

As per a report filed by the Wall Street Journal, a number of lenders, including Wells Fargo, are negotiating to take control of a hedge fund which was earlier valued at more than $2 billion but is now worth close to nothing.

WSJ has reported, Houston-based EnerVest Ltd., a private equity firm which used to focus on energy investments, will leave clients, including major pensions, endowments and charitable foundations, with at most pennies on the dollar.

In 2013, the company had raised and had started investing funds in the energy market when crude oil was being traded at $90 a barrel. To boost its buying power, the company had added $1.3 billion from borrowed money.

On Friday, the closing price of West Texas Intermediate crude was $46.54 a barrel.

“We are not proud of the result,” wrote John Walker, EnerVest’s co-founder and chief executive, in an email.

As per WSJ’s report, only 7 private-equity funds worth more than $1 billion have ever lost money for investors, according to data from investment firm Cambridge Associates LLC. Even amongst those, losses greater than 25% are extremely rare, although there are many energy-focused funds who are in danger of doing so, as per public pension records.

EnerVest’s clients include John D., J. Paul Getty Trust, and Catherine T.

According to the tax filings, MacArthur and Fletcher Jones foundations have each invested millions in the fund. A foundation that supports Arizona State University and Michigan State University have also invested in the fund.

The Orange County Employees Retirement System was also an investors and has reportedly marked the value of its investment down to zero.


Categories: Creativity, Economy & Finance, HR & Organization, Regulations & Legal, Strategy

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