This Private Equity Firm is now Worthless
From this article by Wall Street Journal, a $2 billion private equity firm lost everything when oil prices fell.
EnerVest Ltd., a Houston private-equity firm that focuses on energy investments, manages the fund. The firm raised and started investing money in 2013, when oil was trading at more than double the current price of about $45 a barrel. But the fund added $1.3 billion of borrowed money to boost its buying power. That later caused it trouble when oil prices tumbled.
Wells Fargo is now seizing their assets as collateral.
EnerVest’s funds historically returned more than 30% or so, which enabled it to raise progressively larger pools of cash. In 2010, it raised about $1.5 billion for its 12th fund and added $800 million of debt.
Thoughts/Comments?
Damn, that's tragic.
Shows that its not easy as it looks.
Energy is famine or feast. Excessive leverage in a commodity industry is dangerous.
The fund manager is probably still rich as hell. That's the nice thing about investing other people's money. Socialized risk; individualized return.
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