Service Type: Physical Commodity Risk Management
Project: Risk Management of Long Dated and Illiquid Commodity
This client, along with multiple investors, owns an energy-centered portfolio of upstream oil field service investments as direct investment. Their position contained a concentration risk of long-dated and illiquid physical commodity hedges.
Approach & Results:
To avoid over-hedging, we designed a commodity hedge strategy for their portfolio company to guard against price collapses or basis risk volatility. This aligned well with their underlying company strategies, and they benefited from an improved risk-adjusted return for the portfolio.