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Strong year for Riverstone Energy but longer-term picture less rosy


Riverstone Energy [LON:RSE] has had a strong year so far building on momentum from 2023. The GBP393m Guernsey-based investment trust invests on both sides of the transition theme, with an objective to: “[…] generate long term capital growth by making investments in the global energy sector.”

The fund is in the Association of Investment Companies’ (AIC) Commodities & Natural Resources sector, a sector comprising eight funds, including Geiger Counter [LON:GCL] which The Armchair Trader wrote about last month.

A closed-ended investment company, Riverstone Energy aims to capitalise on the opportunities presented by Riverstone’s [Holdings] energy investment platform and has a developed market bias, with strong exposure to the oil and gas sector in North America.

The fund has been a constituent of the premium listing segment and main market of the LSE since 2013 and when it listed was the biggest debut for an investment company for seven years. The company floated at GBP10/share. Today (18th June) the shares are trading at 820p.

Tapping into private equity and credit

Riverstone Holdings is in itself an energy and power focussed private investment house established in 2000 with around USD40bn in capital raised. Riverstone Holdings invests as a private equity house and credit provider across exploration & production, midstream, oilfield services, power, renewables globally and has structured over 180 transactions globally for the energy sector.

The investment trust is affiliated to Riverstone Holdings and can tap into its deal flow. The fund is the top performer in sector over one-year (on share price total return) to 17th June, with a +41.7% return against the sector average of +3.9%. Over five years, however, the picture is very different. Riverstone finds itself second-worst in sector, with a performance of -3.41% against a sector average of +57.3%

Over 10-years the picture is similar, with Riverstone Energy third from bottom in sector, with a return of -7.43% against a sector average of +65.33%. The fund trades at a discount to premium of -43.15%, again second lowest in sector against a sector average discount to premium of -12%.

Riverstone Energy share price strength

Riverstone Energy’s share price return is up 39% over one-year. Over the year-to-date share price is down 1.95% (to 18th June). The company announced an GBP30m extension of its share buyback programme last month, with GBP18m purchased as at end-March with GBP22m available for buyback. The fund previously announced at the beginning of January 2020 that it was required to repurchase shares, or pay dividends equal to 20% of net gains on dispositions. Management said: “No further carried interest will be payable until the USD60.9m of realised and unrealised losses to date at 31st March 2024 are made whole with future gains.”

The energy sector is in a transition stage, and so is Riverstone Energy. Investors now need to decide whether the investment trust is going to continue its performance into the coming year, or whether now is a good time to take profits.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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