Kenneth Hersh

Kenneth A. Hersh
Born 1963
Dallas, Texas, United States
Alma mater Princeton University (BA)
Stanford Business School (MBA)
Occupation Cofounder and chairman of NGP Energy Capital Management / CEO, president, and board member of the George W. Bush Presidential Center
Years active 1980s-present
Organization NGP Capital Management, George W. Bush Presidential Center, The Carlyle Group
Home town Dallas, Texas
Awards 2014 Master Entrepreneur of the Year (Southwest Region) - Ernst & Young[1]
Website Hersh at The Carlyle Group
NGPEnergyCapital.com
BushCenter.org

Kenneth A. Hersh (born 1963, Dallas, Texas) is an American entrepreneur, business executive, and financier who specializes in the energy industry. Hersh is best known as the chairman and former CEO of NGP Energy Capital Management (NGP),[2] a private equity firm based in Texas,[3] and CEO of the George W. Bush Presidential Center in Dallas.[1] After starting his career with Morgan Stanley’s investment banking division in 1985,[4] Hersh co-founded NGP in 1988.[4] Through his work with the firm, Hersh is credited with pioneering the use of the now widespread “owner-manager” investment model in the natural resources sector.[5] Energy Transfer Partners proved to be one of Hersh's more notable investments with NGP, as the company netted NGP a nearly 3,000% return on investment.[6] In 2012[7] the Carlyle Group acquired a $424 million stake in NGP Energy Capital.[8] The Carlyle Group also appointed Hersh as a senior advisor, with the task of assisting in the "execution of the firm’s natural resources investment strategies."[1] Hersh served as NGP's CEO until 2015, at which point he took on the role of chairman instead.[9]

Hersh is currently a member of the Council on Foreign Relations and the World Economic Forum,[10][11] and is also on the boards of the National Association for Urban Debate Leagues (NAUDL)[11] and the George W. Bush Foundation.[1] On May 31, 2016, he was appointed CEO and president of the George W. Bush Presidential Center.[1] Hersh has been on the board of directors for numerous private and public companies,[11] including Energy Transfer Equity,[12] Energy Transfer Partners,[12] and Pioneer Natural Resources Company.[4] He currently serves as chairman of the Hersh Foundation, a non-profit organization with aims to "secure long-term financial commitments to non-profits in [the North Texas] community."[10] In 2010 Hersh founded the Global Adaptation Institute,[11] a non-profit which aims to show "which countries are best prepared" to handle climate change through its Notre Dame Global Adaptation Index (ND-GAIN).[13] Among other accolades, in June 2014[14] Ernst & Young named Hersh their Master Entrepreneur of the Year for the Southwest Region of the United States.[1] Hersh regularly presents at conferences on private equity, energy, and corporate finance,[11] and has been featured on media outlets such as CNBC as an expert on natural gas and energy investment.[15]

Early life and education

Kenneth "Ken" A. Hersh[4] was born in 1963 in Dallas, Texas, where he spent his childhood.[11] His father worked as a podiatrist, while his mother was an economics professor.[11][6] In 1969[11] Hersh began attending the St. Mark's School of Texas for both his primary and secondary education,[16] and during his high school years he served as the editor for the school paper, the leader of the debate team, and the president of the Wind Energy Club.[6][11] Also working in food service while a teenager,[11] he graduated from St. Mark's in 1981.[16][17] Hersh subsequently attended Princeton University in New Jersey,[11] where he graduated magna cum laude[4] in 1985 with a BA in politics.[4][11] He afterwards attended Stanford University Graduate School of Business, where he graduated with an MBA[1] in business administration[11] in 1989, with designation as an Arjay Miller Scholar.[4][11][10][9] Around this time he also held an internship with the consulting firm McKinsey & Co.[11]

Career

Years with Morgan Stanley (1980s)

Hersh joined Morgan Stanley’s investment banking division in 1985,[4] where he worked with an energy group specializing in "oil and gas financing and merger and acquisition transactions."[9][10][11] Explains Hersh, "they shoved me in the energy group at Morgan Stanley because I was from Texas... I didn't know the difference between natural gas and gasoline."[11] He worked with Morgan Stanley's Energy Group until 1987,[4] during which time he became aware of the then-unusual fund management approaches of Richard Rainwater, an investment manager who would eventually become his mentor.[6] Hersh wrote Rainwater an unsolicited letter in 1987, asking for a job and explaining his ideas on fund management.[6] Rainwater subsequently gave Hersh a summer job[18] and in 1988[11] offered him a position as a manager for Natural Gas Partners, a newly formed private equity fund.[6]

Along with Rainwater and Gamble Baldwin, Hersh and David Albin co-founded the private equity fund Natural Gas Partners (NGP) in November 1988[19] as an energy fund focused on the oil and gas industries.[6] Rainwater was not directly involved with managing the firm, although NGP's business model incorporated many of his investment ideas.[19][18] At the time of NGP's founding,[19] Hersh was still attending Stanford University for his master's degree,[18][6] which he would earn in 1989[19] while working for NGP out of his dorm room.[18] With both Hersh and Albin primarily co-managing the initial funds,[6] NGP created and helped popularize the “startup, buy and build” model of private equity with owner-manager roles.[7] By the early 1990s the firm had established a pattern of funding entrepreneurs and helping startup companies undergo mergers and acquisitions.[18]

Early years with NGP (1994-2004)

Hersh was appointed the chief investment officer at Rainwater Inc. in 1994.[4] Also that year, he was made co-manager of NGP's overall investment portfolio.[4] Among other deals for NGP, in 1996 Hersh oversaw the buyout of Mesa Petroleum, as "Mesa had to reorganize quickly to stave off a hostile takeover, and it was Hersh's job to work out the details."[11] Other NGP portfolio companies in the 1990s included Synergy Oil & Gas[19] and Pioneer Natural Resources.[19]

By March 2005, the NGP platform managed $1.6 billion in funds[20][21] and had invested approximately $1.3 billion in around 70 private energy companies in North America. It had also structured and negotiated transactions totaling around $10 billion.[20] That year William Quinn joined Hersh and Albin as one of the three managing partners of NGP's investment portfolio.[20] In November 2005, NGP also created NGP Energy Technology Partners, a $147 million fund[19] to be dedicated to "companies providing technology-related solutions for the oilfield service, power, and alternative energy industries."[19][5] Hersh described the fund as "not [venture capital] funding, but growth capital intended to help existing companies grow and increase revenue.”[19] Portfolio companies around this time included Energy Transfer Partners among others.[3] Energy Transfer Partners proved to be one of Hersh's more notable investments, as the company netted NGP a nearly 3,000% return on investment over the course of five years.[6]

Purchase by Barclays and Carlyle (2006-2012)

Hersh (right) at the Global Adaptation Summit in 2012.

As of early 2006, Hersh asserted that NGP was continuing its business model of avoiding "untried and risky new technologies," instead focusing on established companies.[19] Hersh at the time continued to serve as a managing partner and CEO.[19] Barclays Capital, an arm of Barclays Bank, purchased a 40% stake in NGP Energy Capital Management's stock in October 2006[22] in what the Financial Times reported was "believed to be among the largest ever [stake] taken in a private equity firm by an outside investor."[22] At the time, NGP managed about $3.5 billion.[22]

The NGP affiliate, NGP Global Agribusiness Partners, was formed in 2010 to focus on the food and agriculture industries.[23] AS of 2010 NGP had maintained a 27% compounded annual rate since its founding.[18] By 2012, NGP had $12.1 billion under management, with around 75% of NGP's business involved in the acquisition and exploitation of gas and oil properties.[8] In December 2012, through Barclays Natural Resource Investments,[7] the Carlyle Group acquired a $424 million stake in NGP Energy Capital.[8] In 2012, Hersh was appointed a senior advisor to The Carlyle Group, and was given the role of assisting in the "execution of the firm’s natural resources investment strategies."[1]

Recent developments (2014-2016)

Hersh served as NGP's CEO until 2015, at which point he took on the role of chairman instead. He also continued sitting on the NGP investment committees and helping with the "strategic direction of the firm."[9] In May 2016, Forbes published an article that described Hersh as the primary influencing factor behind the founding, growth, and sale of Memorial Resource Development, an oil and gas company that was sold to Range Resources RRC in May 2016 for a significant profit.[24]

NGP Energy Capital Management remains an energy affiliate of The Carlyle Group,[25] and May 2016, Hersh was currently deputy chief investment officer for energy and natural resources[26][27] and serves as senior advisor for its natural resources division.[9] During his time with NGP Energy Capital Management, he has overseen around 260 investments in natural resource companies across North America[10][28] and structured and negotiated transactions with a combined deal value of over $40 billion.[29] NGP currently has around $15 billion under management.[1]

George W. Bush Presidential Center (2016)

On May 31, 2016, the George W. Bush Foundation appointed Hersh as the new CEO and president of the George W. Bush Presidential Center.[1] Among other responsibilities, the role made Hersh the manager of the[30] Presidential Library and Museum on the Southern Methodist University campus in Dallas.[17] Hersh was also appointed to the board of the George W. Bush Foundation.[1]

Investment style and public speaking

Ken Hersh has championed the owner-manager model of energy investment since joining NGP in 1988,[5] which he describes as a “startup buy and build” model of private equity.[7] First developed and championed by Richard Rainwater,[18] Hersh, and NGP's other co-founders in the 1980s,[5] the business model outlines the creation of platform companies focused on acquisitions, with each company run by an independent CEO.[5] When selecting CEOs, Hersh describes backing entrepreneurs who control high-producing entities, which allows NGP to enhance the organization’s offerings by reducing operating overhead and improving production levels.[18]

"We [at NGP] like to invest in a company that wants to acquire already-producing wells and then enhance them by cutting operational costs and improving production. Plus, we need the management team to demonstrate their commitment to the venture by investing a portion of their net worth to the project as well. When we find individuals who fit this mold, we often do business with them repeatedly, helping them build and sell several companies."
— Ken Hersh in 2006[19]

In the 1980s, this hands-off approach to investing was rare in the energy sector and looked upon with suspicion.[5] The success of Hersh and the other partners at NGP, however, helped to make this approach a norm.[5] These achievements have led to speaking engagements for Hersh at high-profile events,[19] including the World Economic Forum,[31] where he discussed finance and sustainable growth at their annual meeting[32] as a featured speaker.[11] Hersh also regularly presents at conferences on private equity, energy, and corporate finance and has been featured on CNBC as an expert on natural gas and energy investment.[15] Interviewed by Oil and Gas 360 in 2015,[3] he was on the expert panel at the Energy Outlook: Oil & Gas Dealmaking conference in March 2016.[33] Hersh was furthermore a featured speaker at the International Business Council’s G20 CEO Task Force on Commodities, held in collaboration with the International Chamber of Commerce.[4]

Directorships

Hersh has been on the board of directors for numerous private and public companies.[11] After joining the board of Tide West Oil Company in 1992, in 1994 he joined the boards of both Petroglyph Energy and Rainwater Inc. He became a director of Titan Exploration in 1995, and in 1999 he started a tenure on the board of Prize Energy.[4] From October 2002[12] until 2009[4] he served on the board of LE GP, LLC, a partner firm of Energy Transfer Equity.[12] In 2004 he joined the board of Energy Transfer Partners,[12] remaining a director until 2009.[4]

Other previous directorships held by Hersh include positions with Pioneer Natural Resources Company, Vista Energy Resources, Encore Acquisition Company, and Prize Natural Resources. He also served as a principal at Goff Moore Strategic Partners,[4] he has been a director of Memorial Production Partners GP.[4] He is on the board of Memorial Resources Development Company,[34] which as of 2016 was undergoing a merger with Range Resources.[24]

Philanthropy and civic involvement

Hersh (far left) on a Global Adaptation panel in 2012.

Involved with various nonprofit and civic organizations, Hersh is currently a member of the Council on Foreign Relations, the World Economic Forum,[10][11] and the National Council of the American Enterprise Institute.[9][1] He is on the board of the National Association for Urban Debate Leagues (NAUDL),[11] and was previously a member of the International Business Council's G20 CEO Task Force on Commodities, which was held in conjunction with the International Chamber of Commerce.[10]

Hersh serves as chairman of Hersh Family Investments[4] and the Hersh Foundation, which he and his wife Julie founded in 1997 in North Texas. The foundation aims to "secure long-term financial commitments to non-profits in their community," with a focus on mental health research, mental illness prevention programs, educational programs, and various cultural organizations in Texas.[10] Hersh is currently a member of the Dallas Citizens Council[11][10] and on the board of trustees for both the Communities Foundation of Texas and the Baylor Health Care System Foundation.[11][10] He is also a director of the Texas Rangers Baseball Club.[4] Hersh is furthermore involved with various college boards and educational programs, serving on the dean's council at Harvard Kennedy School[1][11] and on the advisory council of the Stanford University Graduate School of Business from 2009 until 2015.[1][4][9] He was previously on the advisory council of the Bendheim Center for Finance at Princeton University.[4] After joining the board in 1998,[9][1] from 2010 until 2012[9][1] Hersh was president of the board of trustees at St. Mark's School of Texas, where he donated several millions to the school.[11] He remained a director until 2015.[9][1]

Global Adaptation Institute

In 2010 Hersh founded the Global Adaptation Institute,[11] a non-profit based in Washington, D.C.[13] With Hersh serving as chairman until January 2013,[10] the institute maintains the Global Adaptation Index (GAIN), which shows "which countries are best prepared to deal with the droughts, super-storms and other natural disasters that climate change can cause."[13] In 2013, GAIN was given to the University of Notre Dame so Notre Dame researchers could increase the detail of the index, for example adding data for states and provinces.[13] Explains Hersh, "GAIN highlights those countries that urgently need help adapting to a warmer world."[13] Hersh continues to serve on the advisory board of the Notre Dame Global Adaptation Index (ND-GAIN).[4]

Accolades

Hersh has been recognized with a number of awards for business and philanthropy. He was named to the finance category of The DBJ 2014 Who’s Who In Energy List, which is put out annually by the Dallas Business Journal.[35] As part of its Entrepreneur of the Year Program,[11] in June 2014[14] Ernst & Young named Hersh their Master Entrepreneur of the Year for the Southwest Region.[1] St. Mark's School of Texas gave Hersh their Distinguished Alumnus Award in 2015.[1][9]

Personal life

Hersh and his wife Julie reside in Dallas, Texas,[9] and have two children together.[11]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 "Kenneth Hersh Named President & CEO of the George W. Bush Presidential Center". www.bushcenter.org. May 13, 2016. Retrieved 2016-08-25.
  2. ↑ "NGP Energy Capital Management". World Economic Forum. Archived from the original on March 29, 2015. Retrieved 11 December 2014.
  3. 1 2 3 "NGP Launches 11th Energy Private Equity Fund with $5.325 Billion". Oil and Gas 360. January 16, 2015. Retrieved 2016-08-25.
  4. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Bloomberg News, "Executive Profile: Kenneth A. Hersh", Bloomberg News, Accessed April 12, 2012.
  5. 1 2 3 4 5 6 7 Rob Robertson, "Kenneth Hersh: Faith in natural gas unshaken", The Fort Worth Business Press, January 21, 2011. Accessed October 22, 2011.
  6. 1 2 3 4 5 6 7 8 9 10 Elizabeth Souder, "Dallas-area energy investor Ken Hersh burns bright", The Dallas Morning News, October 19, 2010. Accessed October 22, 2011.
  7. 1 2 3 4 "Twenty years of PE: NGP's Hersh on the "Resource Curse"". Wall Street Journal. Retrieved 21 January 2015.
  8. 1 2 3 Jacobson, Gary (December 20, 2012). "Carlyle Group acquires $424 million stake in Irving-based NGP Energy Capital". The Dallas Morning News. Retrieved 2016-08-25.
  9. 1 2 3 4 5 6 7 8 9 10 11 12 "Team: Kenneth A. Hersh". www.carlyle.com. Retrieved 2016-08-25.
  10. 1 2 3 4 5 6 7 8 9 10 11 "About our Founders". hershfoundation.org. Retrieved 2016-08-25.
  11. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 "Kenneth Hersh", Stanford Graduate School of Business, January 21, 2011. Accessed October 26, 2011.
  12. 1 2 3 4 5 "12,500,000 Common Units - Representing Limited Partner Interests". Nasdaq. 2006. Retrieved 2016-08-25.
  13. 1 2 3 4 5 Annin, Peter (April 18, 2013). "GAIN Index moves to Notre Dame". Notre Dame News. Retrieved 2016-08-25.
  14. 1 2 Lau, Hilary (June 27, 2014). "Phil Romano and Kenneth Hersh Win Big at 2014 EY Entrepreneur Of The Year Awards". D Magazine. Retrieved 2016-08-25.
  15. 1 2 NGP CEO: We are in a gas bubble (video). CNBC. 2012. Retrieved November 13, 2012.
  16. 1 2 St. Mark’s School of Texas, "$5,000,000 Gift Honors Hoffman", "St. Mark’s School of Texas," December 10, 2006. Accessed April 23, 2012.
  17. 1 2 "Ken Hersh '81 Leads Bush Center". St. Mark's School of Texas. June 27, 2016. Retrieved 2016-08-25.
  18. 1 2 3 4 5 6 7 8 Phyllis Berman, "Gas-Fired", Forbes, November 13, 2000. Accessed November 13, 2011.
  19. 1 2 3 4 5 6 7 8 9 10 11 12 13 Stowers, Don (January 1, 2006). "NGP forms $1.3 billion fund, its 8th in 17 years, into technology sector as well". Oil and Gas Financial Journal. Retrieved 2016-08-25.
  20. 1 2 3 "Natural Gas Partners Announces the Promotion of William J. Quinn to Managing Partner". Natural Gas Partners press release. March 21, 2005. Retrieved 2016-08-25.
  21. ↑ "Natural Gas Partners Appoints Oil and Gas Entrepreneur Charles R. Stephenson as a Venture Partner". NGP press release. March 5, 2005. Retrieved 2016-08-25.
  22. 1 2 3 White, Ben (October 26, 2006). "Barclays takes 40% stake in NGP Energy Capital". Financial Times. Retrieved 2016-08-25.
  23. ↑ "NGP Energy Capital Management - Investment Platforms". NGP Energy Capital Management. Retrieved 21 January 2015.
  24. 1 2 Helman, Christopher (May 17, 2016). "Built To Sell: Some Backstory On The $3.3 Billion Range Resources-Memorial Deal". Forbes. Retrieved 2016-08-25.
  25. ↑ DeJarnette, Jordan. "2015 CG 10Q".
  26. ↑ Jacobius, Arleen (May 23, 2016). "Carlyle's head of global market strategies to leave". Pensions and Investments. Retrieved 2016-08-25.
  27. ↑ rimack, Dan P (May 20, 2016). "Management Shakeup at The Carlyle Group". Fortune. Retrieved 2016-08-25.
  28. ↑ "Kenneth Hersh". NGP Energy Capital Partners. Archived from the original on December 11, 2014. Retrieved 11 December 2014.
  29. ↑ "Advisory Board Biographies". Princeton University. Archived from the original on March 15, 2015. Retrieved 11 December 2014.
  30. ↑ Steele, Tom (May 13, 2016). "Energy investor Kenneth Hersh chosen to lead Bush Center". The Scoop Blog / Dallas News. Retrieved 2016-08-25.
  31. ↑ World Economic Forum, "Archived copy". Archived from the original on May 23, 2012. Retrieved 2011-10-27., World Economic Forum, Accessed October 27, 2011
  32. ↑ Davos Annual Meeting 2010: Financing Low-Carbon Growth (video). Davos, Switzerland: World Economic Forum. 2012. Retrieved November 13, 2012.
  33. ↑ "Energy Outlook: Oil & Gas Dealmaking in 2016 expert panel - Kenneth A. Hersh". The Deal. thedeal.com. March 29, 2016. Retrieved 2016-08-25.
  34. ↑ "Board of Directors". Memorial Resource Development. Retrieved 2016-08-25.
  35. ↑ "Ken Hersh and Tony Weber Are Named To The DBJ 2014 Who's Who In Energy List". Dallas Business Journal. 2014. Retrieved 2016-08-25.
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