A wave of blank-check companies dedicated to investing in the energy transition is attracting familiar faces and institutions from the oil and gas industry, at the same time that a flood of producer bankruptcies and pressure to pivot away from fossil fuels has called private capital's appetite into question.

During an already record-breaking year for special purpose acquisition companies, or SPACs, investment management firms with prominent oil and gas portfolios such as Apollo Global Management Inc. and Riverstone Holdings LLC are jockeying to raise money for these kinds of shell organizations. These companies will in turn eventually merge with private companies and take the publicly traded SPACs' place on a U.S. stock exchange.

That strategy makes sense as private equity's appetite for new hydrocarbon investments wanes, according to Pickering Energy Partners LP founder Dan Pickering, but it also pits even the biggest firms against a "tsunami" of dollars.

"I think there's no question that clean energy is an area that every traditional energy player is trying to figure out because the energy transition's sort of staring us in the face," Pickering said in an interview. "It feels like there is a tsunami of money chasing clean and renewable energy, and anytime there's a tsunami of money you worry if it will be able to generate good returns. ... I'm nervous about all of this capital in its entirety being able to do well."

So far in 2020, SPACs developed by Apollo and Tortoise Capital Advisors LLC — whose oil and gas pipeline-focused closed-end funds have taken a major hit from plummeting energy stocks — have found targets. Tortoise's Tortoise Acquisition Corp. combined with electric truck company Hyliion Inc. to form Hyliion Holdings Corp., while Apollo's Spartan Energy Acquisition Corp. in July announced a reverse merger with electric car-maker Fisker Inc.

Since both were formed in 2018, however, Vinson & Elkins LLP capital markets and M&A attorney David Oelman believes neither SPAC originally intended to target renewable-energy-oriented firms.

"I suspect ... they were thinking they were going to be pursuing energy investments and probably in their minds that would have been traditional investments," Oelman said in an interview. "I think what happened though was they were coming up on their two-year birthdays, which is the deadline for finding a target, and they were seeing greater opportunity for clean tech so that's where they went."

That opportunity coincided with bad news for existing oil and gas investments as Apollo portfolio company Chisholm Oil & Gas LLC filed for Chapter 11 in June, a challenge that other asset managers interested in clean energy SPACs have also faced.

ArcLight Capital Partners LLC priced its $250 million IPO of ArcLight Clean Transition Corp. just two months after ArcLight Capital's Bruin E&P Partners LLC declared bankruptcy. Riverstone, whose Decarbonization Plus Acquisition Corp. filed for a $300 million initial public offering in September, also saw Fieldwood Energy Inc. file for Chapter 11 protections in August. Alta Mesa Holdings LP and Kingfisher Midstream LLC filed for Chapter 11 in September 2019 — less than two years after one of Riverstone's previous SPACs acquired them for nearly $4 billion — while portfolio company EP Energy Corp. followed suit the next month.

Former oil and gas executives are also getting into the renewable energy SPAC space. Carnelian Energy Capital's Peridot Acquisition Corp. hired former Covey Park Energy LLC co-CEO Alan Levande as the SPAC's Chairman and CEO in August. Daniel Rice, who served as shale gas driller Rice Energy's CEO until its merger with EQT Corp., is standing up his own sustainability-focused blank-check company through Rice Investment Group.