Will Texas ever diversify?
There’s a lot of PE in Texas, but almost exclusively oil and gas. I know of a fair amount of funds that focus on other stuff (e.g. generalist, industrials, etc) but they’re all pretty small. Given the nonstop headlines about people moving out of NYC or CA (which I think are a bit exaggerated but assume for a second) why aren’t more people talking about finance moving more towards TX?
Seems like FL is where all the focus is, specifically Miami. But since many large cap PE funds have offices in Houston that are energy focused, and TX also benefits from the lack of state income tax and lower cost of living just like FL, why aren’t more people talking about finance increasingly moving there?
We all saw Elon in the headlines today moving to TX, and I know Austin has a tech scene and Vista is there. Especially with the energy transition, seems like TX is in need of diversification. Does anyone think Texas might see increased PE activity in non-energy sectors going forward?
Texas has TPG, Vista Equity Partners, Lone star on the larger end with a few more middle market focused players (Kainos, peak rock, GS SSG) in addition to a pretty robust distressed hedge fund scene. I'd argue Texas is more built up than Florida.
Random note but GS just hired a ton of bankers to work on tech/gas tech deals in Houston. When I say a ton I mean they literally built a whole team over the past year (which isn’t too many in TX compared to NY but it’s still a ton of people to just hire).
I don’t think Texas is going to become a barren wasteland anytime soon. I think that the O&G scene there will slowly be replaced by something else (probably some kind of new tech scene) throughout the years as we switch to cleaner energy sources, and then there will only be small boutiques for whatever O&G deals there are left.
What even is gas tech?
Have never heard the term gas tech before, but could refer to blue/green hydrogen and carbon capture and storage.
I’d argue that TX is extremely diversified outside of Houston. Austin has a very strong tech / VC scene (admittedly PE is smaller, but there are a handful of notable shops as mentioned above). Dallas has an extremely built-up (and rapidly expanding) PE, HF, and family office scene with far more non-O&G funds than pure play energy ones at this point.
Yeah tech/VC scene is pretty real in Austin specifically.
This is what I’m thinking, Austin is going to be like their San Francisco, and Dallas is going to be like NYC, diversified across industries. There’s a Federal Reserve there, non-O&G there, I think CBRE is moving there and Schwab too. Good amount of real estate firms there too. Trammell Crow, a well-known developer from the area, had a vision for it to grow into a more national commercial hub (https://www.google.com/amp/s/www.heralddemocrat.com/lifestyle/20181004/…). That being said, I had a friend from Houston whose dad used to call people from Dallas “ATM millionaires.” If I liked the South more, I’d probably move to Dallas.
Already did.
Interesting to hear this from everyone, I guess I was just a bit ignorant to how much was out there. Is there any way to find a list of large PE funds (UMM/MF) that have offices in TX? I’ve searched before and primarily found lists of funds based in TX, which misses all the firms with their HQ in NY or something but an office in TX. And the list of shops based in TX with a fund size >$1bn is primarily just energy, plus the names everyone has already listed.
Redbird Capital and The Riverside Company are both $1bn+ and have Dallas offices.
Perot, Rosewood, Patterson Thoma, Dundon Capital Partners, and Q Investments are all family offices based here that do direct investing with north of $1bn in assets. Bass is here but I think is mostly GP / LP stakes these days.
Highland Capital is traditionally a hedge fund but has a PE wing (assets have fallen dramatically though, I think they’ve gone from ~$35bn to ~$8bn)
I few I would add (non-energy):
Houston: The Sterling Group just raised a $2B fund, operationally focused (others: CapStreet)
Dallas: Trive Capital raised $1B, operationally focused (others: Insight, Kainos, Prophet, Gauge, etc)
Austin: Vista obviously, Peak Rock Capital raised a little over $1B recently (others: Blue Sage)
Is it common for oil and gas bankers to be given the opportunity to interview for these non oil and gas but texas based pe shops?
Not sure about firms in Austin, but most/all the Dallas funds recruit heavily out of Houston O&G banking
Do you know if there's a lot of competition for oil and gas bankers to enter these generalist funds?
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