Florida and Orange County Pensions Lose in EnerVest Fund

Thirteen is shaping up to be quite the unlucky number for private-equity firm EnerVest and its investors.

The Houston-based firm has lost significant capital in its $2 billion EnerVest Energy Institutional Fund XIII, which completed fundraising in 2013, the year before oil prices plummeted. Major losers in the fund include the Orange County Employees Retirement System, which according to public records contributed $40 million, and the Florida State Board of Administration, which invested $100 million, according to manager of external affairs John Kuczwanski.

EnerVest is now working to restructure the fund as a bevy of institutional investors - many of which have poured capital into private equity - are now reckoning with the loss of money in a traditionally successful asset class. The Florida State Board of Administration’s investment in the EnerVest fund has been written down to $10.6 million, according to Kuczwanski.

“While we would love for all investments to earn money, that’s not the reality in investing,” he said by phone. He added that the pension fund manager’s broad allocation to private equity has been successful, gaining $4.1 billion since fiscal year 2013-2014.

The Wall Street Journal reported July 16 that EnerVest’s $2 billion fund is “worth essentially nothing” and its lenders are working with Wells Fargo & Co. on a plan to satisfy its debt.

“We’re not going bust,” Ron Whitmire, senior vice president and chief administrative officer at EnerVest, said in a phone interview. He confirmed that the firm’s Fund XIII is struggling, but said “Our value is not zero” and “Wells Fargo is not negotiating a takeover.”

Wells Fargo is acting as the lead banker on the firm’s thirteenth fund, which has been hit by declining oil prices, Whitmire said. “We’re working with them and the LPs on trying to come up with the best solution for everybody.” LPs, or limited partners, contribute capital to private-equity funds and typically include investors such as pensions, endowments and foundations.

Investors put money into EnerVest’s fund in 2013, when oil prices rose to over $100 a barrel. Price began plunging in 2014, trading around $46 per barrel around on Tuesday afternoon, according to data compiled by NASDAQ.

EnerVest’s twelfth fund is also struggling due to lower oil prices, Whitmire said. The Teachers’ Retirement System of the State of Illinois invested as much as $75 million in Fund XII, according to the pension fund’s public records. The Western Conference of Teamsters Pension Plan also contributed to the firm’s twelfth fund, valuing the investment at $27.5 million in 2011, its public records show.

A spokesperson for Teachers’ Retirement System of the State of Illinois declined to comment on its investment in EnerVest’s twelfth fund. A spokesperson for the Western Conference of Teamsters did not respond to a phone call seeking comment.