Saturday, August 8, 2015

Carlyle's Rubenstein: Buy (Our) Carbon Related Energy Asset Which is No Longer for Sale

CNBC reported:

Philanthropist and billionaire private equity professional David Rubenstein has told CNBC that oil prices will bounce back over time and will make carbon-related energy assets one the best additions to any investor's portfolio.

"In time (oil) prices will come back, in time demand will catch up with supply, and in time I do believe that carbon-related energy will turn out to be one of the best investments in the world," he told CNBC Tuesday.
It just so happens Carlyle had a carbon related energy asset ready to go public on Thursday, August 6th.. reported:

Three years after a brush with extinction, the former Sunoco refinery in South Philadelphia has increased dramatically in value under new owners and could be worth more than $1 billion.

The private-equity firm Carlyle Group, which rescued the refinery in 2012 in a joint venture with Sunoco, on Thursday is launching an initial public offering of Philadelphia Energy Solutions Inc. on the New York Stock Exchange. The $250 million IPO would value the underlying refinery enterprise at $1.3 billion, if PES shares launch at $16.50.
Investors did not buy Rubenstein's sales talk as Carlyle postponed its PES IPO, calling into question the Carlyle Group's reputation for investment timing.  .

Oil majors and U.S. shale producers have been hit hard by a dramatic fall in the price of oil since mid-June last year. Brent crude and WTI have recently dipped back below the $50 a barrel level after a brief rally in the second quarter of 2015. 

Throughout this period, Rubenstein has maintained his optimism, however, and told CNBC that he was "finding assets that are now for sale at much lower prices."
Wolf Street reported:

A few weeks ago, Fitch Ratings raised its high-yield default outlook for 2015 from a range of 1.5%-2% to a range of 2.5%-3%. For energy companies, it expected the default rate to jump to “the 6%-7% range.” The overall default rate would increase further in 2016.
Rubenstein didn't clarify Carlyle's preferred method for gaining control over ever declining carbon related assets. Watch to see how many Carlyle buys straight up with equity and how many come via a back door debt default.