Sovereign Wealth fund Sues to Block Private Equity Deal for Gas Driller Ascent Resources
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A major dispute has erupted in teh private equity world,as the Abu Dhabi Investment Council (ADIC) has filed a lawsuit to halt a deal involving Ascent Resources,one of the largest private natural gas drillers in the United states. The suit alleges a “conflicted sale” orchestrated by Energy & Minerals Group (EMG) that undervalued the asset and prioritized the interests of the PE firm over those of its investors.
The legal challenge, first reported by the Financial Times on Wednesday, centers on EMGS plan to sell its 30 percent stake in Ascent Resources to a continuation fund – a relatively new financial instrument – managed by the same private equity group. After a Delaware court motion, EMG and ADIC agreed on thursday morning to delay the transaction until at least late Febuary, pending review by a commercial arbiter.
Rising Concerns Over Fund-to-Fund Transactions
The lawsuit shines a spotlight on the growing trend of fund-to-fund deals within the private equity industry. These transactions, where a PE firm sells assets from one fund to another, have become increasingly popular as firms grapple with challenges in finding external buyers for their investments. According to reports, continuation deals accounted for a record 19 percent of all private equity asset sales in the first half of 2025.
However, these deals are also raising concerns about potential conflicts of interest. Critics argue that they can allow PE firms to circumvent market valuations and extract fees in ways that are not aligned with the best interests of their investors.
Allegations of Undervaluation and Fee Manipulation
ADIC, part of the $300 billion investing giant Mubadala, alleges that EMG attempted to force a sale of Ascent Resources at a price that did not reflect its true value, especially given its considerable gas reserves in ohio’s Utica shale. A senior official stated that EMG’s actions were a purposeful attempt to “reap a massive benefit for themselves at the expense of ADIC and the other investors.”
The sovereign wealth fund further contends that the fund-to-fund sale was strategically timed to reset performance fees, known as “carried interest,” on a deal that was unlikely to generate significant returns if sold to an self-reliant buyer or taken public. This maneuver would allow EMG to collect fees on a new valuation without necessarily delivering superior returns.
A Family Legacy and Energy Expertise
EMG was founded by John Raymond, the son of Lee Raymond, the longtime chief executive of ExxonMobil. The firm specializes in energy investments and has built a significant portfolio of oil and gas assets. The current dispute raises questions about the firm’s governance and its commitment to transparency in its dealings with investors.
Seeking a Broader Sale Process
Along with seeking an injunction against the continuation fund deal, ADIC is calling for EMG to initiate a full sale process for ascent Resources. The sovereign wealth fund believes that a broader auction would attract interest from strategic buyers and potentially yield a higher valuation for the asset.
Both EMG and its legal counsel have declined to comment on the ongoing litigation. ADIC also declined to provide further details, citing the sensitivity of the legal proceedings.
The outcome of this case could have significant implications for the private equity industry, potentially leading to increased scrutiny of fund-to-fund transact
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