U.S. energy investor Kimmeridge has offered to buy natural gas producer Ascent Resources for $6 billion amid a heated battle over plans of the gas driller’s private equity backer to transfer its stake from one of its funds to another, Kimmeridge’s managing partner Ben Dell told the Financial Times.
The Energy & Minerals Group, a private equity firm focused on natural resources, plans to transfer its more than 30% stake in Ascent Resources into a newly formed continuation vehicle, which is estimated to value the gas producer at about $5.5 billion.
However, the plan has been met with resistance by another Ascent investor, sovereign wealth fund Abu Dhabi Investment Council, which early this month sued the Energy & Minerals Group over the proposed deal, accusing the private equity firm of self-dealing.
“Defendants have made multiple material misstatements and omissions about the proposed transaction and employed a variety of coercive tactics to obtain the necessary Advisory Board approval,” by Abu Dhabi Investment Council said in the lawsuit.
Mason Capital Management, a long-standing investor in Ascent Resources, also flagged last week the flawed sales process, saying that the conflicted transaction by The Energy & Minerals Group substantially undervalues Ascent, enriching EMG at expense of its LPs and other company unitholders.
Mason Capital also noted that it is considering an all-cash offer for Ascent Resources at a superior value to the proposed EMG transactions.
In a letter to Ascent’s board of managers, “Mason corroborates and expands upon allegations made by the Abu Dhabi Investment Council Company PJSC and its affiliates in litigation brought against EMG, highlighting the structural conflicts, informational deficiencies, and coercive tactics that plague the EMG transaction.”
Amid the rare public battle in the private equity world, Kimmeridge is now offering $6 billion for Ascent Resources, higher than the disputed fund-to-fund deal that would value the gas producer at about $5.5 billion.
“When we look at the valuation that is being floated out there, our belief is there are better options for investors,” Kimmeridge’s Dell told FT in an interview published on Tuesday.
By Tsvetana Paraskova for Oilprice.com
