Energy Ventures breaks record with new fund

01 March 2008

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Energy Ventures has closed its third fund, Energy Ventures III, on NOK 1.34bn ($243m), exceeding its NOK 1.2bn target, and more than doubling commitments from the previous Energy Ventures II that closed in June 2005 on NOK 589m (July/August 2005, page 6). The vehicle held a first close in September 2007 on NOK 1.01bn ($183m) (October 2007, page 9). In the final close of the fund, total commitments of NOK 330m were attracted. The fund has 8+1-1 structure and the terms and conditions are described as industry standard. Minimum subscription was NOK 10m and GP contribution totalled 25m.

The new fund aimed to employ a more international structure in order to increase the scope of investors to the fund. Also, in connection with the first close of the vehicle, Energy Ventures opened Houston and Aberdeen offices to better cover these markets. The international appetite for the fund was described as very healthy and the fund had a positive momentum throughout the fundraising process.

Energy Ventures II, the new fund's predecessor, was fully invested in Q4 2007, but has not yet made any divestments. Energy Ventures I, which closed on NOK 315m in August 2003 (September 2003, page 6), has been fully invested and five out of eight investments have been exited with strong returns.

CLP acted as the Norwegian legal adviser, while Bedell Cristin provided legal advice for the fund's Guernsey-based legal adviser. Aztec Financial Services (Guernsey) Ltd was the vehicle's administrator in Guernsey.

Investors

Ferd Venture is a strategic partner to the fund and committed NOK 250m. Other investors that participated in the final fundraising round were LGT Capital Partners, LMS Capital, Temasek Holdings, Partners Capital and Keppel Offshore & Marine. Gjensidige Forsikring, KLP, DnB Nor, Umoe, Hoegh Capital Partners, Jebsen Asset Management, Torvald Klaveness Group, Vital and Storebrand invested NOK 705m ($128m) in the first close of the vehicle. Other small investors and Energy Venture's management also participated in the initial close.

Investments

The fund will focus on early-stage companies in the oil and gas technology and services sector, in the North Sea, but also in the US and Europe. Energy Ventures III has made its first investment when it led a $12m series B round in California-based Direct Drive Systems announced on 21 January 2007.

People

Ole Melberg, managing partner, is the main manager of the fund. The fund will also be invested by four other professionals, Helge Tevit, Einar Gamman, Leif Andre Skare the CFO Pelle Blidtsen and Anoop Poddar. Energy Ventures is also looking to recruit more professionals to the team.

Name: Energy Ventures III

Target: NOK 1.2bn

Closed on: NOK 1.34bn

Focus: Early-stage oil & gas

Contact: Ole Melberg

Address: Energy Ventures AS, PO Box 207, N-4001 Stavanger, Norway. Tel: +47 51 84 12 95; Fax: +47 51 52 46 07

Advisers: CLP (Legal); Bedell Cristin (Legal).