Energy drives record year for natural resources

CoalDespite the global commodities rout that has seen oil drop to below $35 a barrel, investors ploughed record sums into natural resources funds last year, overwhelmingly into the energy sector.

Energy-focused funds accounted for 91% of the $63 billion (€59 billion) raised by closed-end private capital natural resources funds.

According to figures from financial information provider Preqin, energy-focused funds accounted for 76% of funds that successfully closed when reaching their funding targets and they raised $57 billion in total. The five largest funds closed last year had an energy focus.

This trend looks set to continue into this year, as 65% of the closed-end private capital funds in the market are focused on energy investments.

The capital raised last year represents a 14% increase of the natural resources sector over 2014. Fund sizes increased by 81%.

Away from energy, nine agriculture funds raised $3.9 billion, whereas timberland and mining saw a combined five funds close after raising $1.9 billion.

“With more agriculture funds closed in 2015 focusing on emerging markets rather than North America, the challenge for fund managers going forward will be deploying this capital into good value opportunities,” said Tom Carr, head of natural resources products at Preqin.

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