‘Much needed boost’: Private equity firm ARC raises $780M for Canadian oil and gas fund

CALGARY – Even as Canadian oil and gas companies struggle to raise capital, the country’s largest energy-focused private equity firm ARC Financial Corp. has raised $780 million for a new fund.

The Calgary-based private equity firm announced Tuesday it had raised money from institutional investors in Canada, the United States and Europe to close its ninth fund focused on “private Canadian entrepreneurial exploration and production and oilfield services companies.”

In a release, ARC Financial CEO Lauchlan Currie called the funds raised “a needed boost to the Canadian oil and gas industry,” which has struggled to raise capital from institutional investors.

The firm said the $780 million eclipses all the money raised for oil and gas in domestic public markets over the last 18 months – a stark illustration of the difficulties many oil and gas companies have faced in trying to raise capital in the sector.

“We are pleased to be able to bring capital to support the Canadian oil and gas industry at a time where access to capital has been challenging,” ARC Financial president Brian Boulanger said in the release.

Both debt and equity financings in the Canadian energy sector have been declining sharply in recent years.

The issue of declining investment levels in the Canadian energy sector has been highlighted by the CEOs of major banks and investment managers in recent years as a major problem.

Los Angeles-based Capital Group Cos analyst and investors Darren Peers wrote a letter to Prime Minister Justin Trudeau in Nov. 2018 blasting the Canadian government’s energy policies, saying it was hurting investment in the sector. His firm manages US$1.7 trillion and was shifting its spending to other jurisdictions.

Investment in the energy industry has declined in each of the last five years.

According to the ARC Energy Research Institute, the research affiliate of ARC Financial, spending on conventional oil and gas is down 29 per cent this year to an expected $19.5 billion in 2019, compared with $27.4 billion spent in 2018. In five years since oil prices fell in 2014, spending on conventional oil and gas in Canada has fallen 58 per cent from a peak of $46.8 billion on 2014.

The amount of money expected to be invested in the oilsands this year is $12 billion, which is down 4 per cent from $12.5 billion in 2018 and down 64 per cent from the peak of $33.9 billion in 2014.

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