Guinness AM readies oil and gas fund after double hire Thursday 05 May 2016

Guinness AM readies oil and gas fund after double hire

By Terri-Ann Williams

Guinness Asset Management is preparing to launch an oil and gas exploration fund in the wake of two new hires to bolster its resources coverage.

The investment firm has hired two senior energy analysts, Sachin Oza and Stephen Williams, who will work within the existing energy team, which currently consists of Tim GuinnessWill Riley and Jonathan Waghorn.

Both Oza and Williams join from M&G Investments, with the former boasting 17 years of investment experience and Williams bringing with him 13 years of having worked across the energy and investment industries.

The planned oil and gas exploration fund will be a high return, closed ended fund and will invest in quoted companies in emerging market exploration basins.

The team are currently in talks with potential investors to develop the most appropriate fund structure for the new concept. One of these options includes the newly developed Dublin AIFM QIAIF ICAV structure.

Accessible to professional investors, with a minimum investment of over €100,000, the team are targeting an annualised fund return of 20-25% per annum over 5 years.

By using a ‘constructive activist’ approach they hope to unlock value by using various forms of asset aggregation between junior companies within a region, to drive a strategy which will enhance the value of those assets.

Commenting on the launch, Tim Guinness, founder of Guinness Asset Management, said: ‘This new fund idea would complement our existing energy fund range very well as it focuses on smaller oil and gas exploration companies while we have historically focussed on medium to large oil & gas companies.’

‘The wealth of pre‐existing detailed research of opportunities in exploration basins; the 30 position portfolio; and the specific constructive activism approach; coupled with the depth of energy sector experience across the team all adds up to a unique and timely proposition’.

With oil and gas prices at cyclical lows, caused mainly by US fracking, valuations of companies in emerging basins are particular low and their sell off has been fairly haphazard. Guinness said this has caused a large price gap between current equity market valuations and potential market value to emerge.

Guinness AM said the fund is likely to be of interest to investors looking to tap into the energy theme through a listed investment fund/hybrid private equity, offering significant potential upside.