Warburg Pincus and The Blackstone Group have invested a combined C$275m (€179m) in a Canadian bitumen extraction company as private equity firms remain active in the energy sector.
As part of the financing, the two private equity groups will also be represented on the board of directors of Osum Oil Sands, a privately held company, by Jeffrey Harris and David Krieger, managing directors at Warburg Pincus, and David Foley, senior managing director of Blackstone.
The companies did not disclose how much was being invested by each of the two private equity firms, only that Warburg Pincus was leading the fundraising and that it included a “substantial investment” by Blackstone.
Natural bitumen is a thicker grade of petroleum, and most of its supply can be found in the province of Alberta, Canada, where Osum is headquartered. The oil price spike of recent years has made upgrading to crude oil very attractive to companies like Osum that extract it from sand.
Private equity investors have continued doing energy deals despite slowdowns in most other sectors.
At the end of July, Metalmark Capital Partners and Greenhill Capital Partnersinvested in the remaining energy assets of Provident Energy Trust for about $305m.
Also last month, Avista Capital Partners and EnCap Investments each invested $122.5m in Royal Offshore, whose management contributed an additional $105m.
According to investment banking data provider Dealogic, two of the five largest buyout deals in the first half of this year were in the energy sector.
The first was from a consortium that includes UK buyout firm Candover and US bankGoldman Sachs, which announced it will take private oil and gas services company Expro for £1.8bn. The other was First Reserve Corporation’s $3.7bn purchase of oil rig transport company CHC Helicopter.
Other large buyout firms have been active as well.
Last month, The Blackstone Group announced two energy deals in a span of three weeks, investing $500m each in Crestwood Midstream Partners and Kosmos Energy. Private equity firm Kayne Anderson also invested $500m in Crestwood.