Alternative asset manager Kayne Anderson Capital Advisors is seeking to raise $1.5bn for a dedicated US oil and gas production fund, reported Reuters, citing people familiar with the development.

The move comes despite many private equity firms exiting the oil and gas sector due to financial volatility and environmental concerns.

Last week, the alternative asset manager initiated marketing to raise funds for the Kayne Private Energy Income Fund III.

The fund will be used to acquire and develop businesses generating steady cash flow from established production sites, the sources told publication.

Kayne Anderson expects the Kayne Private Energy Income Fund III to follow its previous two energy income funds that were successful.

In July 2022, Kayne Partners, the growth private capital strategy of Kayne Anderson, closed new capital of more than $600m for its growth platform.

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By GlobalData

Earlier this year, Reuters reported that Kayne Anderson Capital Advisors and Warburg Pincus were considering divesting oil and natural gas exploration and production company Terra Energy Partners for approximately $2.5bn, including debt.

With the help of an undisclosed investment bank, the buyout companies initiated a tender process to sell their majority stake in Terra.

Formed in 2015, Terra is engaged in gas production in the Piceance basin in Colorado. It is focused on the acquisition and development of large producing oil and gas assets in North America.

Terra holds 370,000 net acres that produce approximately 530 million cubic feet per day of gas.