Quantum Capital Group has raised more than $10 billion in aggregate capital commitments for the energy industry, the private equity firm said Oct. 29. The total is inclusive of co-investment.

The funds were raised for its private equity, structured capital and private credit platforms.

A source familiar with Quantum’s plans for the funds said the firm doesn’t earmark funds for specific sectors but will look at each investment on a risk-adjusted return analysis. Only companies that meet or exceed their investing threshold will receive investments.

“Most of Quantum’s capital has gone into oil and gas because that is where the company has found the best risk-adjusted returns,” the source said.

The source said E&Ps, midstream companies and energy transition firms that have already been backed by the fund are Bison Oil & Gas, Firebird Energy, HEQ Deepwater, QB Energy, Western Basin, Vickery Energy, Rockcliff Energy, Trace Midstream and Haventus.

Quantum has a flexible mandate to invest where needed in the capital structure, and the firm invests across the entire energy value chain, including in oil and gas, midstream, thermal and renewable power generation, energy infrastructure and the energy transition, the private equity firm said in an email.

Quantum said the total raised includes:

  • $5.25 billion for the firm’s private equity flagship Quantum Energy Partners VIII;
  • $2.8 billion for the firm’s structured capital fund Quantum Capital Solutions II; and
  • Approximately $2 billion for other associated funds on the Quantum platform.

Quantum’s announcement comes after another large private equity firm, EnCap Investments LP said it closed EnCap Energy Capital Fund XII LP with capital commitments of $5.25 billion, exceeding its initial target and hitting its hard cap. Combined with $1.2 billion in co-investments, Fund XII raised a total of $6.4 billion in funds for Fund XII.

Wil VanLoh, Quantum’s founder and CEO, recently told Hart Energy that it’s unlikely that oil and gas exploration will discover another Permian Basin or Marcellus Shale. He said opportunities are more likely in using modern technology and apply it to other reservoirs, including conventional.

“In shales, we have developed these horizontal wells, we have developed these massive fracks, and we effectively created artificial permeability and porosity. That’s what made those reservoirs give up hydrocarbons and economic quantities,” he said.

Those same technologies can be applied not only to higher quality rock, but the lower quality conventional rock, he said.

“And we’re seeing that unlock reservoirs that, back in the day, 10 [years] or 20 years ago, no one would’ve developed them because we didn’t have the technology, and we didn’t have the commodity prices that the levels are at today to make them economic.”

Quantum said its latest fundraising cycle received “broad institutional support from a diverse, global group of existing and new investors.”
The firm said the successful capital raise will advance Quantum’s mission to provide affordable, reliable, abundant and environmentally sustainable energy to meet the world’s growing energy needs.

In a press release, VanLoh said Quantum was grateful for the support of long- and first-time investors.

 “This milestone is a testament to the strength of our track record and Quantum’s 26-year history of partnering with leading energy-focused entrepreneurs, management teams, and businesses to provide the capital and support they need to execute their business plans,” he said.

“As the energy industry experienced unprecedented change over the past decade, we have continued to evolve our strategy and grow our talented team to capitalize on the corresponding opportunities in our dynamic industry. In particular, we have invested heavily in building a team that combines extensive investment, operating, technical, digital, and ESG expertise to better price and manage risk for our investors, while also enabling us to better support and be a value-added partner to the companies in which we invest.”

Ajay Khurana, co-president of Quantum, said the firm’s energy credit platform will be used to advance innovate energy sector companies. The firm has provided developmental capital for E&Ps such as Devon Energy and Antero Resources.

“As there continues to be a massive need for global investment in all forms of energy, we are confident in our continued ability to drive meaningful value for the businesses and teams we partner with, our investors, and the global community,” Khurana said.

Kirkland & Ellis LLP served as legal counsel to Quantum.

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