Alternative Investment Awards 2017 39 Management LP Company: BlackGold Capital Management LP Contact: Sharam Honari Email: [email protected] Address: 109 N Post Oak Ln #520, Houston, TX 77024, USA Phone: 1-832-706-4873 AI170040 BlackGold Capital BlackGold Capital Management is a Houston based alternative investment firm focused on credit investments in the energy industry. We spoke to Partner Sharam Honari to learn more. BlackGold Capital Management invests across the entire capital struc- ture of energy companies, primarily in the North American upstream, midstream and oilfield service sectors. Sharam discusses the firm’s investment strategy in more detail. “Here at BlackGold our strategy is opportunistic in nature, we employ a deep fundamental research-driven approach in analyzing energy assets and capital structures which enables us to capitalize on market dislocations, mispricing’s and special-situation opportunities. BlackGold was founded by my two partners Erik Dybesland and Adam Flikerski in 2006, and in 2014, KKR & Co. LP purchased a 24.9% passive minority interest in the firm. We have a platform of products including hedge fund vehicles, a private drawdown structure, an insurance dedicated fund, and managed account offerings. Most our investors are institu- tional and many utilize our team as an energy resource. “Fundamentally, we believe there is a tremendous opportunity in energy credit as we are only one year past the largest decline in U.S. energy credit history. In our view, we are in a new multi-year energy upcycle with several years of recovery and expansion ahead. Energy companies have been making great efforts to right sizing their balance sheets and adapt to a lower commodity price environment by becoming leaner and more efficient. Companies have reduced costs structures, focused on their best prospects, cut dividends, issued equity and sold assets. As a result, energy credits have become less correlated to oil price moves since many companies can now generate a positive economic return near $50 per barrel.” Since the financial crisis, U.S. corporate debt outstanding has doubled while primary dealer inventory of corporate bonds has collapsed. New regulations such as Dodd Frank and the collapse in the energy sector have led banks to reduce both their credit and energy exposure. The shift towards passive investing in credit markets has further increased volatility as mutual funds and ETF’s randomly buy/sell credits based on inflows/outflows. Sharam outlines how these developments will affect BlackGold and how it will adapt around them. “We believe sector specialization provides an investment edge to exploit the structural and technical inefficiencies in the credit markets. Going forward we see four main drivers of returns in the energy sector; special situation opportunities, crossover credits (HY to IG), re-org/distressed and opportunistic & relative value trading.” Best Energy-Focused Credit Investment Firm - USA