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A US private equity firm has agreed to postpone a disputed deal to sell its stake in a large gas driller to one of its own funds, after a large Middle Eastern sovereign wealth fund sued to block the transaction.
Houston-based Energy & Minerals Group has consented to the delay of the planned sale of a 30 per cent stake in Ascent Resources, one of the largest private natural gas drillers in the US, to one of its sister funds after the Abu Dhabi Investment Council alleged the deal short-changed investors.
The lawsuit, reported exclusively by the Financial Times on Wednesday, asked for an emergency halt to EMG’s planned sale of its Ascent stake to a new so-called continuation fund managed by the PE group by the end of the year. The two parties agreed on Thursday morning to delay the transaction until at least late February, after it was vetted by a commercial arbiter, they said in a motion approved by a Delaware court.
The dispute between the sovereign wealth fund, which is part of the $300bn investing giant Mubadala and EMG, an energy investor founded by John Raymond, son of longtime Exxon chief executive Lee Raymond, shone a further spotlight on the potential conflicts that can arise as PE groups resort to selling assets between funds to exit ageing investments.
Abu Dhabi Investment Council accused EMG of forcing a “conflicted sale” of Ascent Resources at too low a valuation in an effort to “reap a massive benefit for themselves at the expense of ADIC and the other investors”.
The sovereign wealth fund objected to the price EMG was offering for Ascent Resources, which holds vast gas reserves in Ohio’s Utica shale. It also accused the PE group of using the fund-to-fund sale to reset performance fees on a deal it said was unlikely to generate lucrative “carried interest” fees, if it were sold to an independent buyer or taken public.
The lawsuit comes as many private equity investors and advisers have warned about the fraught nature of fund-to-fund deals, with PE groups acting as both the seller and the buyer in the transactions. Such deals have soared in popularity as private equity groups have struggled to find buyers for trillions of dollars in unsold assets. Continuation deals amounted to a record 19 per cent of all PE asset sales in the first half of 2025, the FT previously reported.
In addition to asking for an injunction against its continuation fund deal, the Abu Dhabi-based sovereign wealth fund is calling for EMG to run a full sale process for Ascent Resources, which it believes would have interest from strategic buyers or could be taken public.
The sovereign fund declined to comment on ongoing litigation. EMG and its lawyers did not respond to emails seeking comment.