Published Apr 27, 2021 by A.J. Mistretta
The energy transition toward a low-carbon future is prompting many longtime players in the oil and gas sector to broaden their focus. The pivot is occurring not just among the energy companies themselves but across the industry spectrum—from oilfield support services companies and energy marketing firms to private equity groups. One such company is Riverbend Energy Group, a Houston-based private equity fund that recently changed its name from Riverbend Oil & Gas and entered the renewable energy, or energy 2.0, space with the hiring of two new managing directors. Eric Danziger, the former CRO at Innowatts and CFO of Genability, and Jordan Frugé, former CMO at Sunnova, have joined the 18-year-old Riverbend with a plan to target North American growth-stage companies in the renewable energy space.
We spoke with Danziger and Frugé about the kind of companies they’re focusing on, Houston’s role in the energy transition and the types of energy 2.0 operations most likely to succeed in this region.
Why is it important for Riverbend, which has traditionally focused on oil and gas, to move into new energy investment right now?
Danziger: As an industry leading investor, Riverbend has always followed the broader energy market trends. This means following the market conditions such as regulatory, financial trends on areas that make sense as energy investors. Sometimes this thesis means a focus on certain resources—oil, gas, minerals, solar, wind, etc.—and other times it means a focus on new geographies like Bakken or the Permian. Riverbend has always adapted its energy investment thesis to the market trends, and right now, the leading indicators have pointed to investments in renewable energy. The cost and return profile are areas we find attractive, and we believe our team is best suited to capitalize on these opportunities.
Talk a bit about the types of companies you intend to focus on as part of this strategy.
Frugé: Riverbend’s energy transition focus is on companies in the services, finance and development sectors of solar, storage, electric vehicles and energy management. We believe the infrastructure and services sector of the energy transition is vastly underinvested in and is a segment of the market with a lot of great, growth-oriented businesses looking for the right financial partner to take them to the next level. We are working with entrepreneurs and teams that will enable and “power” the energy transition.
Riverbend is based here in Houston but will make investments across North America. Where do you see the nodes of concentrated activity right now?
Frugé: The companies we are working with are based all over the country. We have deals and companies on the west coast, east coast and in Texas. If COVID has taught us anything, it is that working remotely via Teams, Zoom, etc. is very much possible. As you can imagine in COVID, geographic location has become less of a factor. While historically innovation came out of Silicon Valley, we are seeing more growth and innovation in other areas, from Houston and Austin to the Carolinas.
Houston has a long history as the energy capital of the world and there’s an effort to try to retain that identity as we move toward a low-carbon future. How do you see Houston’s role in the energy transition?
Danziger: Houston has always been and will always be the energy capital of the world. Given the technical expertise needed to manage energy—whether it’s oil, gas or renewables—Houston and Texas will always have the universities here that feed the technical skills needed in energy. We are already seeing these energy companies “transition” their efforts and teams to understand and navigate the entire energy landscape. The universities in Texas are the foundation of the energy landscape and will continue to train the professionals needed to see it continue to grow.
What areas of new energy or energy 2.0 do you think Houston is well-positioned to help bring to scale?
Frugé: Houston and the energy markets specifically have always been great at raising capital and deploying it. We believe that the energy transition will be no different. The energy companies and capital needed to support them will continue to be here as the energy markets transition to renewable sources in addition to fossil fuels. Additionally, the job opportunities in Houston and new energy are going to be significant. Many of the roles and skills needed are highly technical – engineering, design, electrical, etc. Texas is very well suited to fit these needs as the technical skillset from fossil fuels to renewables is highly transferable.
What can this region be doing differently to incentivize and foster the next generation of energy companies and related businesses?
Danziger: By offering financial incentives, like tax benefits, our region could motivate energy companies and related businesses to move their headquarters here or open and office in the Houston area. Additionally, offering proper training opportunities for both oil and gas and renewable energy jobs has a proven track record of spurring growth and attracting talent to our area.