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Private Equity Firms Reel From Falling Oil Investments

Carlyle Group co-founder and CEO David Rubenstein participates in the Washington Ideas Forum,   in Washington


It isn’t just oil companies that are suffering from cheap oil prices, but private equity funds like Stephen Schwarzman‘s Blackstone and David Rubenstein‘s Carlyle group that invest in them. Bloomberg reported that a dozen firms have lost $11.7 billion in 27 publicly traded oil companies since June when oil peaked. Since then oil prices have fallen dramatically, no thanks to OPEC refusing to cut production. There is a widespread belief that they want to preserve market share and feel threatened by the drilling boom in the United States. In addition, an economic slowdown in Europe is causing lagging demand for fuel.

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Oil was as high as $115 at one point this year, but since then it has dropped to about $61 a barrel. Many companies backed by firms have lost 50% of their value in the latter half of the year. Warburg Pincus, which former Treasury Secretary Thomas Geithner now heads has a sizeable stake in Kosmos and has seen its investment in Laredo decline 66%. Carlyle made a dramatic increase in its energy holdings in 2012, and is seeing losses. Apollo owns a stake in EP Energy, which is down 20%. Greg Beard, head of Apollo’s energy investments is not confident, and said, “It could get worse from here.”



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