As a specialized natural resource private equity firm, EMG is focused on the development of operating businesses that generate significant free cash flow with management teams who have relevant experience in the particular jurisdiction and commodity.
In order to generate what EMG believes are the most attractive risk-adjusted returns, we utilize an investment strategy with “three-dimensional” diversity across:
- Geographies: those with historical precedents of rule of law and operating businesses/industry practices
- Commodities: those that are critical to decarbonization (i.e., iron ore, lithium, rare earth elements, copper, nickel, manganese, etc.) or the functioning of the global economy (i.e., natural gas, NGLs, crude oil, metallurgical coal)
- Business Functions: two separate business functions (extractive/upstream and processing/deliverability/midstream)
Due to our team’s extensive experience operating assets, EMG has a strong emphasis on risk identification, management and mitigation and does not believe in simply outsourcing these responsibilities to consultants and/or a portfolio company management team. We believe that it is critical to have alignment between agents and principals. Members of EMG’s management team have committed approximately $735 million to date across EMG’s five main funds and co-investments.
We are dedicated to a science-based approach. When making an investment in extractive/upstream or processing/deliverability/midstream projects, EMG makes a deliberate and concerted effort to analyze opportunities based upon subsurface fundamentals before making business decisions. EMG believes that the intrinsic value of any natural resource-based investment is grounded in the underlying reserve quality – i.e., rock characteristics and product qualities – and that high-quality resources truncate downside risk and allow for the preservation of margins.
EMG’s investment decisions follow a consistent, disciplined investment thesis, with three key tenets:
- Low-cost sources of supply/production – either direct or underlying
- High quality commodity-based products – either direct or derivatives thereof
- Strategic proximal locations – either to direct end user(s) or key export points
While EMG’s historical private equity funds were diversified across energy and mining, in order to meet the divergent needs of Limited Partners going forward, beginning in 2023, our main fund offerings will be structured as two separate funds. Both funds will invest across the extractive/upstream or processing/deliverability/midstream part of the value chain; however the commodities they target will be different (either those that are critical to decarbonization or more traditional commodities that are integral to the global economy).