Jonathan Gray, Blackstone Group LP's president and COO, also said firm executives anticipated future investment opportunities in energy. There is opportunity to lend to midsize companies, including energy companies that are facing challenges because they do not have access to the public markets for liquidity and banks are more constrained in the current environment, Mr. Gray said during Blackstone's April 18 earnings call.
Many investors have exposure to energy in their infrastructure and real asset portfolios. This year's P&I manager survey results show U.S. institutional tax-exempt infrastructure assets were $42.3 billion as of Dec. 31, up 38.8% from the prior year and 165% from Dec. 31, 2014. In 2019, natural resources assets under management worldwide hit a record of more than $760 billion, with the majority in energy investments, according to Preqin. Also last year, natural resources funds raised $109 billion, and were boosted by the closing of mega infrastructure funds that also invest in energy, Preqin data show.
So far, oil and gas have been hit the hardest of all infrastructure assets, especially in the U.S., said Gordon Bajnai, London-based partner and global head of infrastructure at advisory firm Campbell Lutyens & Co.
Oil and gas has been hit by both the coronavirus pandemic and infighting between Saudi Arabia and Russia on oil prices, said Mr. Bajnai, who was prime minister of Hungary in 2009-2010.
Aside from oil and gas, midstream assets also are now perceived by investors as a high-risk sector now, he said. "As the dust settles, some investors will look cautiously at midstream," Mr. Bajnai said.
At the same time, energy managers are expected to invest more capital in the renewables sector. Most investors expect that the rollout of renewable energy will continue and perhaps accelerate, he said. "Globally, people expect governments will use sustainability and 'green' as a major element of stimulus," Mr. Bajnai said.
Pension funds and other asset owners will continue to be pressured to get greener, he said. "People have experienced living in cities where the smog levels are disappearing" as a result of global stay-at-home orders, he added.
And managers are raising capital to take advantage of the shift toward renewable energy, Preqin data show. In 2019, renewables made up 68% of energy-focused funds and 44% of aggregate capital raised, according to Preqin.
Meanwhile, the time in the spotlight has passed for MLPs, which were once a popular and growing vehicle for accessing the energy sector.