Investment banking head leaves firm to found private equity outfit

Investment banking head leaves firm to found private equity outfit

Investment banking head leaves firm to found private equity outfit Scotiabank Global Head of Investment Banking Adam Waterous has declared plans to resign from his position and launch his own private equity fund.

Waterous, who is set to leave the bank at the end of the month, said in an interview with the Financial Post that he will launch a Calgary-based firm, Waterous Energy, with $400 million in startup capital. Brookfield Asset Management CEO Bruce Flatt’s brother, Gord Flatt, will serve as lead investor for the fund.

It will acquire controlling stakes in private companies “focused on the unconventional space across North America — the Montney, the Permian, the Eagle Ford — and supply them with the capital and help them grow,” according to Waterous.

Hydraulic fracturing and horizontal drilling technologies are allowing unconventional producers to extract oil from previously inaccessible reserves. These technologies are driving unprecedented rates of return even in the relatively depressed price environment.

“I think in Alberta, despite this painful restructuring we are going through, the energy business is going to have a tremendous renaissance,” Waterous said, noting huge potential from the enormous number of drilling locations. “We are going through a drilling boom for the next ten to 15 years, just on what is already discovered and planned.”

The Harvard University graduate and former McKinsey & Co. consultant’s predictions of a revival are informed by direct industry experience. He and his brother built a Calgary-based oil and gas investment bank, Waterous & Co., which expanded into a global player and was eventually acquired by Scotiabank in 2005.

Waterous stayed on as part of Scotia’s energy investment banking unit, rising to become the global head of investment banking. With his purview over all sectors – including power, mining, financial services, and real estate – he gained a panoptic view of the Canadian economy.

He predicts that the unconventional energy business will succeed the oilsands as the next big growth driver, citing new production technologies that have allowed massive production increases and the best rates of return in decades. He also believes that despite the government’s fixation on green energy, it will support the trend because it creates less carbon-intensive energy.

“The entire story of Canadian organic growth for the last 15 years, basically from 2001 to 2016, was the oilsands, and that was a higher carbon intensity development,” Waterous said. “The next 15 years is going to be unconventional — natural gas liquids and natural gas driven development. The relative carbon intensity is going to drop very dramatically as a result.”

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