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U.S. Markets

EMG fund associated with McClendon up 6.3 percent: investors

HOUSTON/NEW YORK (Reuters) - The Energy & Minerals Group, the private equity firm that helped finance U.S. fracking pioneer Aubrey McClendon's comeback after he was ousted as CEO of Chesapeake Energy Corp CHK.N, had cumulative returns of 6.3 percent in its EMG Fund III through 2015, according to portfolio statements from investors.

The private equity group, which invested some $3 billion in new businesses set up with McClendon, made the reported gains during a time when oil prices slid 60 percent CLc1.

McClendon died in a car crash on March 2, the same day EMG told investors in a letter that it was pulling away from him. A day before his death, McClendon was charged with breaking antitrust laws by rigging bids for land. He denied the charges

His death left behind a vast web of business and personal investments that have not yet been sorted through by probate court in Oklahoma, though EMG emphasized in the March 2 letter it had independent control of half a dozen oil and gas companies it invested in alongside McClendon’s holding company American Energy Partners.

EMG declined to comment on its 2015 returns. Led by John Raymond, son of former Exxon Mobil XOM.N Chief Executive Lee Raymond, the firm invests in a range of commodities and has about $17 billion in assets.

As a whole, energy-focused private equity funds created between 2006 and 2012 earned net returns of between 5.5 percent and 13 percent for 2015, according to data from private equity fund provider Preqin.

EMG Fund III’s internal rate of return, a measure of profit, was 8.17 percent through the third quarter of last year, according to portfolio statements from the Missouri Department of Transportation & Patrol Employees Retirement System, which invested in the fund.

That return since inception has since declined to 6.3 percent as of Dec. 31, 2015, according to portfolio statements from two others investors, namely the Employees Retirement System of Texas and Rollins College in Florida.

Reuters obtained some of the documents through open records requests, while those of Rollins College were on its website. Officials from Texas and Missouri declined to discuss returns. Rollins referred questions to its consultant Prime Buchholz & Associates, which could not be reached for comment.

The numbers reported by pension funds and their consultants generally coincide with those of private equity firms, according to industry experts.

Of Raymond’s funds, EMG Fund III is the one most associated with McClendon’s effort to build a new oil and gas empire after Chesapeake. The fund was formed in December of 2013 and made its first investments in July of 2014, according to a statement from the Employees Retirement System of Texas.

EMG Fund I opened in 2007 and EMG Fund II in 2011 and both have had returns in the past of more than 20 percent, according to the website of the Pennsylvania Public School Employees’ Retirement System. It is not clear what the funds’ latest returns are.

Reporting By Koh Gui Qing, Terry Wade and Ernest Scheyder; Editing by Carmel Crimmins and Tiffany Wu

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