GP Led Deals Are Reshaping Energy Secondaries, Here's Why
GP led continuation vehicles have quietly become the fastest growing part of the energy secondaries market. In this episode of The Energy Pragmatist, Ben West sits down with Greg Reid, President of Real Assets at Westwood Group Holdings and Lead PM for the firm's $2.7 billion Energy Investment Team, to find out why, with over six billion dollars of deals currently in the pipeline.
"The GP led unlocking a lot of value in these old funds is off the charts. We're looking at over six billion dollars in deals today in the pipeline."
A big part of the answer is timing. Many funds from the 2008 to 2017 vintages are now approaching the end of their life, and rather than force a sale, GPs are increasingly using continuation vehicles to unlock value in those older, proven funds. For buyers, that means an opportunity to get into assets with seven to ten years of performance history already on record, rather than backing a blind pool.
Greg also explains why the structure itself favors the GP led format over traditional LP secondaries. LPs in old funds sell roughly 89% of the time regardless of price, which lets GPs and CV buyers set the terms. He walks through how Westwood evaluates whether a GP is running a CV for the right reasons or simply resetting the clock on a fund that underperformed, using ten to fifteen years of NAV marks and quarterly letters to see how a manager actually behaved through stress, including March 2020.
From there, the conversation moves into where Westwood is putting capital to work. With oil trading well above its five year strip and natural gas undervalued relative to LNG export growth and AI driven power demand, Greg describes the firm's pivot toward natural gas, midstream and LNG, including two recent LNG investments made ahead of final investment decisions. He also discusses Westwood's first purchase of a stake in a GP itself, a move designed to earn carry rather than only pay it.
In this episode, Ben and Greg discuss:
What is driving the surge in GP led continuation vehicles
Why maturing fund vintages are creating opportunity in already performing assets
Why endowments and foundations are still exiting upstream despite strong performance
How to diligence a GP using a decade or more of NAV marks and quarterly letters
Buying EMP assets at around two times cash flow with no debt
The shift from oil to natural gas, midstream and LNG
The arbitrage opportunity in pre FID LNG projects
Why Westwood bought its first GP stake
Where Greg thinks the next big secondary opportunity will show up
Watch the full episode:
This episode is for informational and educational purposes only. The views expressed are those of Greg Reid as of the recording date and may change without notice. Nothing discussed is investment, legal, or tax advice, or a recommendation to buy or sell any security. It is not an offer to sell, or a solicitation of an offer to buy, an interest in any fund or investment product. Any such offer is made only through confidential offering documents to qualified investors. References to specific companies, managers, transactions, and market data are for illustration only, and Westwood and its clients may hold positions in securities discussed. Forward-looking statements and market views are estimates and may not occur as described. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.
