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Shale investment firm is pushing clean energy SPACs

Shale

By: Ethan Wu – Markets Insider – Riverstone Holdings, which made a fortune betting on American shale, is now pushing $1.3 billion in clean energy SPAC deals, according to a report from the Wall Street Journal.

Riverstone has so far participated in four green SPACs – some of which are still pending – including a hydrogen-powered truck company, an EV battery charging company, and another battery firm making solid-state cells, an alternative to lithium-ion.

The investment firm’s most recent SPAC in August raised $315 million to take a decarbonization-focused company public, though the hunt is still ongoing. All told, Riverstone is set up to make as much as $240 million from sponsoring the four SPAC deals, NYU law professor Michael Ohlrogge told the Journal.

What is odd about Riverstone’s recent green successes is that its most successful past deals have been in oil and gas – and some of its previous clean-energy deals have ended in disaster.

Riverstone’s 2006 renewable energy fund, the company’s first-ever, lost 90% of its value for clients including California’s public pension plan, according to the Journal.

“You’d think a monkey couldn’t have lost that much money,” Riverstone co-founder David Leuschen said at the time.

Where Riverstone has previously struck gold is in oil-and-gas drilling, particularly in the wake of the shale boom. It took out stakes in risky wildcat drillers and lent to pipelines, attracting billions in investor funds. A 2016 SPAC investing in West Texas oil doubled in value.

But even those fossil fuel successes proved somewhat illusory. The 2016 SPAC lost much of its gains as the shale market was slammed by a supply glut. A different SPAC investing in Oklahoma extraction filed for bankruptcy in 2019 before being liquidated, according to the Journal.

Ultimately, what matters for SPAC sponsors is whether they can hold on to their cut of the deal. On that count, Riverstone has been a smashing success of late. Its recent hydrogen-powered truck SPAC earned Riverstone a $56 million incentive package – more than eight times the costs of creating the deal.

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