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Brantwood Special Situations Fund I, LP.
Location: Houston, TX, USA
Sector: Investment Fund
Brantwood is seeking to raise capital for a private debt fund with the investment objective of maximizing returns for qualified limited partners (“Limited Partners”) by targeting private debt investments in various energy and energy infrastructure related securities. Such investments will include, but are not limited to, senior and second lien debt securities with equity participation. The Fund will have a particular focus on select lower middle market oilfield services (“OFS”) and equipment manufacturers located in the United States that have high quality management, niche dominance, and differentiated and proven technologies and intellectual property. To a lesser extent, the Fund will also seek conventional E&P companies with operational and/or geological advantages (collectively, the “Investments”).
Significant energy experience – Brantwood understands that success starts with people and we have invested time and capital in building the foundations of a talented and effective team. Brantwood professionals have deep energy industry experience from diverse backgrounds, including: a) direct profit and loss experience with early-stage, lower, and middle market companies; b) broad operational experience across the energy services sector; c) strong financial and structuring experience; d) experience managing energy credit funds and making related investments. The Brantwood team is based in Houston which provides us access to experts to assist in diligence, portfolio oversight, management, accounting, fund administration, legal and tax matters.
Access to top industry personnel and skills – Brantwood will supplement its team’s deep energy industry knowledge and relationships with a dynamic advisory network through its relationship with The Energists.
The Energists is a management consulting firm operating solely within the energy industry. The firm was established in 1979 and comprises former energy industry executives, technical experts and functional professionals. The direct industry experience of The Energists helps reduce risk and adds value for its clients in three distinct practice areas: search, advisory and professional development. Each of these services helps address its clients’ knowledge and talent needs enabling the achievement of key business goals.
Mezzanine, credit, finance and energy investment experience – Each of the Brantwood principals has significant experience in the Energy sector, having spend their entire careers in the industry. Mr. Hill and Mr. Leonard have spent many years working for oilfield services companies and understand the technology, equipment, geology and oversight required for complicated oil and gas projects. Mr. Sinders has worked in energy finance for over 30 years in various positions including investment banker, CFO and private equity investing. Mr. Prohl has 20 years of buy-side and sell-side experience in the sector, including mezzanine investing, commercial lending, and investment banking. The principals combine these skills to identify and select the most attractive opportunities, properly diligence each one, supplement operational/management teams, and provide constructive oversight for each investment.
Proprietary deal flow – Brantwood, the Advisor, is based in Houston, the global energy hub. Brantwood believes that one of its significant competitive advantages is its ability to source and diligence differentiated investment opportunities not typically available to other groups. As a result, we expect to source the majority of our opportunities from proprietary sources. Our team consists of experienced professionals with deep industry expertise and relationships across operating companies, energy executives, intermediaries, lenders and private equity. We will also lever our ongoing relationships with high quality management teams from historical portfolio companies of prior investment firms with which Brantwood principals were associated.
Limited competition – Despite improving energy fundamentals, there continues to be a shortage of financing alternatives for lower- and middle-market companies. Traditional lenders are not as active as they have been in the past due to a combination of regulatory pressures and portfolio risk management. This void is being filled by private capital providers, most of which are looking for bigger deals ($50M+) and are therefore competing aggressively for a small number of transactions. Many of the older private funds with legacy energy investments have not fared well through the recent low-price environment, especially those with an OFS focus.
Increasing demand for financing alternatives – As of the fourth quarter of 2017, many smaller energy companies are looking towards mergers and acquisitions as a possible solution to their credit related issues; however, valuation expectations remain divergent among buyers and sellers. Nevertheless, many smaller OFS companies must sell or restructure soon in order to avoid ruining supplier and customer relationships. Many smaller onshore E&P companies must drill and produce or risk losing land positions. These dynamics create a temporary dislocation representing a solid opportunity for investors.
Streamlined and efficient organization – The Brantwood team is currently comprised of four professionals with a primary focus of executing the Brantwood fund’s investment strategy.All back-office functions (accounting, legal, administration, etc.) will be outsourced to specialists, thereby minimizing the fund’s overhead. Strait Capital, one of the leading fund administrators, will handle all of the fund’s administrative functions, including an investor portal for quick and easy communication with its limited partners.
Fund Name: Brantwood Special Situations Fund I, LP
Target Return*: 15% Gross IRR
(* Targeted performance is not necessarily indicative of future results and there can be no assurance the targeted performance will be achieved or that the Fund will be able to implement its investment strategy or achieve its investment objectives)
Target Commitments: Up to $100 million
Sponsor Commitment: Up to $1 million from General Partner
Investment Period: 3 years (18 month principal recycle provision from time of original investment)
Term: 5 years plus 2 additional one-year period extension options
Management Fee: 2.0% per annum on committed capital during the Investment Period; thereafter, 2.0% on invested and outstanding capital
LP Preferred Return: 8% per year
GP Carried Interest: 20% with high water mark protection for LPs
Jon Hill – Partner
27-year energy industry veteran working for and with oilfield services companies globally. Experienced with start-up and turnaround situations in companies of all sizes both private and public as well as new product development. He is the Chairman & CEO of The Energists, Former Non-exec Director of London based E&P company Angus Energy and a Serial investor in private and public upstream energy companies. He has spent 4 years with Schlumberger as a VP Marketing & Technique, 2 years with Smith International (Saudi Arabia) as a General Manager of newly formed Drilling, Evaluation, Completions & Production segment, 11 years with Pathfinder Energy Services as a General Managers and 9 years with Halliburton Drilling Services in various positions.
Kurt Prohl – Partner
Kurt’s has 20 years of work experience in energy finance with substantial buy-side, sell-side and lending experience,10 years with Kayne Anderson Capital, a $25 billion energy-focused alternative investment management firm,10 years in energy investment banking with UBS, BMO and PaineWebber- M&A, equity/debt underwriting and commercial lending and 5 years in secured lending with IBM Credit Corporation.
Bern Leonard – Operating Partner
Bern is an Independent Consultant to the upstream energy industry. He worked for 10 years at Precision Drilling; gained valuable operating experience as their Integration Manager, and subsequently managed their domestic expansion as US General Manager; initially joined to help Precision gain SOX 404/302 certification. He began finance career at EY (formerly Ernst & Young) in business risk analysis.
John Sinders – Operating Partner
Over 30 years in energy finance focusing on business development, M&A investment banking, capital raising, and private equity. He worked 2 years with Calera Capital, a middle market private equity firm where he was responsible for origination, execution and oversight of oilfield services investments . He spent 3 years with Franks International, one of the largest casing and well construction companies in the world, as Executive Vice President and 14 years in energy investment banking with Jefferies & Company, RBC and Howard Weil. He founded and led the energy groups at Jefferies and Howard Weil.