|PE Auction Stars|
Then Evercore Partners Inc. came knocking. "I had no intention of leaving, but I was attracted to what [founder] Roger Altman was trying to build, taking a very strong advisory firm and combining it with very strong oil and gas expertise," says the 46-year-old native of Saskatchewan, Canada.
Finnie moved over in June as head of Evercore's oil and gas acquisition and divestiture advisory business. He's since made quick work of some of the largest energy transactions.
He advised Kinder Morgan Inc. on its $21 billion purchase of El Paso Corp.; Itochu Corp. on its $7.2 billion purchase of family-owned Samson Investment Co. with Kohlberg Kravis Roberts & Co. LP, Natural Gas Partners and Crestview Partners; and Samsung C&T Corp. on its $800 million purchase of Parallel Petroleum Corp. from Apollo Global Management LLC. Most recently, Kinder Morgan tapped him for the sale of El Paso's exploration and production arm in February to Apollo.
While shy on deal specifics, Finnie does say he's betting on greater private equity participation in energy. The reasons: "There are macro factors -- growing economies and increases in oil prices -- but the biggest factor is the demand to put money to work in the sector, where historic returns have been strong."
Increasingly the megabuyout firms -- like KKR, Blackstone Group LP, TPG Capital and Apollo -- also are delving into venture-based investing, that is, backing experienced management teams with early prospects, an area that used to be the domain of smaller players such as NGP, EnCap Investments LP and Quantum Energy Partners LLC. "It can be riskier, but the upside can be greater," Finnie says.
Apollo's acquisition of Parallel, for example, occurred when oil prices were low and the target didn't have enough liquidity to fully develop its properties. Apollo gave Parallel the capital to drill wells and get production up. When oil prices rose, Apollo decided to sell it, doubling its money.
Historically, explains Finnie, "exits have come through sales, but increasingly we're seeing capital markets being tapped for IPOs."
Finnie earned an economics degree at the University of Saskatchewan and a law degree from the University of Western Ontario. He handled oil and gas transactions for four years at Burnet, Duckworth & Palmer LLP in Calgary, Alberta, before earning his M.B.A. from Northwestern University's Kellogg School of Management.
After graduation, he joined RBC Capital Markets LLC, later moving to TD Securities Inc. before landing at Goldman, Sachs & Co. in New York to focus on Canadian deals. In 2003 he moved back to Calgary to work for Scotia in its M&A group. After it bought oil and gas asset and divestiture business Waterous & Co., Finnie moved to Houston in 2006.
Sam Oh, a partner at Apollo, says Finnie impressed him. They met at a pitch when Finnie was at Scotia and Oh was at Morgan Stanley's private equity arm (Scotia didn't win the assignment). "What makes Shaun so effective is that he offers up the right combination of strategic and technical advice -- a rare but important combination," Oh says.
Which direction are PE firms headed in? Finnie expects more buyouts of public energy companies, even though it's more difficult to lever them up. He also expects sponsors to make less risky, longer-term investments for lower, but solid, returns. "There's a tremendous demand for yield," he says.
He believes they'll be even more active buyers of natural gas companies and assets, with prices for the commodity so low. "Private equity firms don't have to answer to public shareholders who are going to penalize them for holding an out-of-favor commodity," he argues.
If Finnie's predictions are correct, he'll most likely be front and center of dealmaking in the sector.