Wil VanLoh
Editor’s note: This profile is part of Hart Energy’s Hall of Fame series honoring industry pioneers and the Agents of Change (ACEs) who are leading the energy sector into the future.
Window washing. Lawn mowing. Directory advertising. Wil VanLoh did it all while working to put himself and his wife through college at Texas Christian University in Fort Worth, Texas, in the 1990s.
That work ethic would serve him well. At 28, VanLoh founded what would become Quantum Capital Group, which was among the first private equity firms focused on energy.
“I was very entrepreneurial. I loved being creative and figuring out how to solve people’s problems and build businesses that solve people’s problems,” VanLoh told Oil and Gas Investor. “Some guys liked to goof off when they were in college. My hobby was trying to figure out businesses that would make money. I didn’t really have other hobbies in college.”
He graduated in 1992 with a bachelor of business administration degree in finance. VanLoh didn’t set out to work in energy, but his interest in investment banking landed him a job with the energy team at NCNB—now Bank of America Merrill Lynch. Then it was on to Kidder, Peabody & Co., which had a larger, more active energy investment group. There, VanLoh learned about the E&P and midstream businesses.
“After a couple years of doing that, normally you go back and get an MBA,” he said. “I decided that I didn’t really want to go back and get an MBA and I was going to start my own boutique investment banking firm.”
After a few years of taking deals to firms the likes of EnCap Investments and NGP Energy Capital, VanLoh decided to try his luck at raising a fund himself. He teamed up with A.V. Jones, even then an industry legend. VanLoh raised his first private equity fund.
“He was the only person that was in a real position to influence and mentor me. When we got into business, I was 28 and he was 62,” VanLoh said. “But he was an entrepreneur, too.”
Entrepreneurs typically have a knack for recognizing talent and letting people learn from their mistakes,
he said.
“He’d always say, ‘you go figure it out,’ but he was always there to talk through things and bounce ideas off of and give advice when asked—but never when not asked,” VanLoh said.
Most Valuable Asset
In the years since the founding of Quantum, VanLoh has built a powerhouse. The firm has grown with the industry, pivoting to include sustainable investment funds in its enormous portfolio while still supporting fossil fuel production and transmission within its assets under management, now worth some $28 billion.
“It takes a career, a lifetime, to build a reputation,” VanLoh said. “You can lose it literally in a minute by doing something that you shouldn’t do or compromising your integrity.”
During its 26 years, Quantum has backed more than 150 companies. That wouldn’t be possible without a winning track record, as well as a knack for treating people well.
“One of the things that really attracts management teams and entrepreneurs to do business with us is the reputation that we’ve developed over many years. We have a history of doing what we say we’re going to do—even when it costs us something, even when it hurts us. Your word is your bond,” he said. “People will really only do business with you over the long run if they trust you.”
The philosophy extends to those who work internally at Quantum, too. The oil and gas industry has faced new challenges in recent years, subject to changing public whims on ESG matters and its own need for fiscal discipline. Among the net effects is a profound drop in accessible capital and a reduced workforce.
VanLoh encourages a “servant leadership” model at Quantum, which is part of the firm’s success, he said.
“When you, as a leader, serve the people that work for you, they love you, they love the company, they will run through walls,” VanLoh said. “Business is tough. You want people that feel like, ‘hey, I’m going to go the extra mile here because I’m appreciated, I’m respected, I’m encouraged and empowered and treated well.’”
As a result, during the lean years, Quantum’s team didn’t flee the space—or the firm.
“The rest of the industry probably wasn’t having a lot of profits either, but (Quantum employees) were much more committed and bought in because they knew over the long term, they were part of the winning team and that we would have some really good years ahead,” he said.
Core Competency
Many banks, generalist and institutional investors and private equity firms have exited the energy industry as fossil fuels have come under a barrage of social backlash in recent years. Quantum is one of a handful of firms that remain in the energy industry, but it, too, has grown with the times.
From its inception, Quantum engaged in the E&P space, as well as making some investments in the midstream and oilfield services sectors. But in 2010, the firm broadened its portfolio to include power. Then, in 2017, Quantum entered the renewables space.
“We’ve stayed focused on energy. I think that what’s key and core is we are energy experts. We know what we’re good at and we know what we’re not good at,” VanLoh said. “It’s taken a lifetime to really become an expert in the energy space, and I’m a big believer as an investor, you have to have a core competency. You have to have a competitive advantage.”
Instead of delving into industries with other hard assets like timber or real estate, Quantum opted to build on its advantage. Following the example of Warren Buffet’s “moat-building” style, Quantum hunkered down in the energy space.
Closing in on three decades in the sector, the firm has in-house experts on every vertical within the energy space. Between the collective knowledge and industry insight—and enormous amounts of data—Quantum has “built a mote around our business that makes it very hard for people to come in and compete.”
Indeed, Quantum announced in October the closing of a $10.5 billion raise covering investments in oil and gas, midstream and the energy transition businesses.
The firm’s flexible mandate means it can invest where needed in the capital structure through private equity, structured capital and private credit platforms. The total raise 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.
Included among the firms that Quantum is backing through the recent raise is Bison Oil & Gas, Firebird Energy, HEQ Deepwater, QB Energy, Western Basin Energy, Vickery Energy, Rockcliff Energy, Trace Midstream
and Haventus.
“We never had a desire to be the biggest. We always had a desire to be the best in terms of generating the best risk-adjusted returns for LPs,” VanLoh said. “Our customers are the investors that put money in our fund and the management teams that we give money. We think about how to serve them best.”
—Deon Daugherty, editor-in-chief