Warburg Pincus opening Houston office as it boosts energy investments

Jordan Blum, Houston Chronicle

One of the nation’s largest private equity firms is opening its first Houston office as it prepares to make deeper investments in the energy sector.

Warburg Pincus on New York will open an office early next year at Five Post Oak Park near the Galleria and River Oaks areas – in between energy company hubs downtown and in the Energy Corridor.

The firm has invested in Texas oil and gas companies for decades, but decided to establish a local presence for the first time. Warburg Pincus plans to fill a void as publicly traded companies scale back spending because of low oil prices. Private equity firms that are flush with cash can take advantage of investment opportunities passed on by cautious public companies. .

David Habachy, a Warburg Pincus managing director, is helping to lead the new Houston footprint after leaving the Houston office of Kayne Anderson Capital Advisers.

“We are getting in a lower-for-longer commodity environment,” Habachy said. “We’re losing a lot of competition from the publicly traded companies. We see that as a recipe for success.”

Before oil prices plummeted from more than $100 per barrel as recently as 2014 to about $55 today, “a lot of public companies were pressured by shareholders to grow, grow, grow,” Habachy said. “Investors are now looking for full-cycle returns and it’s almost flipped the script.”

Warburg Pincus will opening with a small team that’s expected to grow.

Managing partner David Krieger is moving from New York to lead the office with Habachy. Moving to Houston is about more than just investing in Texas oil and gas, Krieger said, because birtually all of the world’s top energy companies have Houston hubs.

“It really just seems Houston has become the epicenter,” Krieger said, “not just in the U.S., but internationally as well.”

For instance, one of Warburg Pincus’ investments, Apex International Energy, is a Houston-based company focused on oil and gas exploration and production in Egypt.

Warburg Pincus has about $44 billion invested in more than 150 companies worldwide. The firm is one of the nation’s largest private equity investors after competitors like Apollo Global Management, the Blackstone Group, the Carlyle Group and KKR & Co.

Warburg Pincus is headed by co-CEOs Charles Kaye and Joseph Landy, but its most famous executive is its president, Timothy Geithner, a former U.S. Treasury secretary under President Barack Obama.

Some of Warburg Pincus’ more recent energy investments in Texas include Zenith Energy and Rubicon Oilfield International, both of Houston, Navitas Midstream Partners of The Woodlands, Kosmos Energy and Venari Resources, both of Dallas, and Chisholm Energy Partners of Fort Worth.

Another Warburg Pincus investment, the Austin company, Brigham Resources, recently sold its Permian Basin assets for $2.55 billion to Diamondback Energy of Midland.

The Houston office will be Warburg Pincus’ third in the U.S. after New York and San Francisco, and its 10th investment office worldwide.