April 19, 2016
Global turbulence in the oil and gas sector has dealt both challenges and opportunities to players in Canada—a reality which is the focus of a Lexpert article featuring comment from Torys partners Derek Flaman and Neville Jugnauth. Below is an excerpt of the article.
“In a nutshell,” [Derek] continues, “when commodity prices are low, well-capitalized PE firms, as a general statement, like to take advantage of that environment and acquire quality assets.” He sees that activity ramping up in 2016, with both American PE firms and smaller Canadian ones such as ARC Financial Corp. and Azimuth Capital Management seeking quality assets. So far, the bulk of PE interest has been focused on midstream assets such as transportation systems and pipeline facilities, oil and gas storage or processing plants.
PE firms generally aim to recoup a return on their investments via a liquidity event in five to seven years. They’ll either privately sell a company or asset, or take a company public with an IPO and sell equity in it through the stock market.
But, says Neville Jugnauth – Flaman’s colleague and a fellow partner at Torys in Calgary – until the dust is settled on such issues as the Alberta Royalty Review, the province’s Climate Leadership Program and the Paris agreement on climate change, PE firms may hold back on triggering deals in the Canadian energy sector.
To read the full article, click here.