CPPIB acquires stake in power producer Calpine
Canada Pension Plan Investment Board is helping to purchase one of the greatest independent power generators in the U.S. amid a surge in energy and power deals this year.
The retirement fund said Friday it would invest $750-million (U.S.) within a $5.6-billion money deal to privatize Houston-based Calpine Corp.. CPPIB is currently helping to direct the investment component of the deal alongside a consortium. Through the deal, CPPIB plans to boost its exposure to energy economy south of the border and the power.
Calpine is a power giant with 80 plants currently or running being constructed that could generate electricity. The majority of the operations of the company are in its market of Texas, but Calpine resources in Northern California are according to the firm.
Energy and electricity mergers and acquisitions have been this season, with deal action up 28 percent compared according to figures. Up to now, $293.1-billion worth of those deals are announced in 2017.
Other Canadian firms also have shown enthusiasm for making acquisitions in the U.S. power space. This summer, Hydro One Ltd. struck a $4.4-billion (Canadian) bargain for Washington-based natural gas and electric transmission company Avista Corp.. And at the start of the year, AltaGas Ltd. purchased WGL Holdings Inc., comprised of a gas utility and a gas gathering and processing company, for approximately $4.5-billion (U.S.)
Investment giants and pension funds like Brookfield have sought to increase their vulnerability to renewable energy this year.
This surge in activity comes as U.S. President Donald Trump has sought to defend the coal industry, which has been decreasing because of a confluence of factors such as environmental issues and the glut of accessible and affordable natural gas. From a perspective, coal has been losing ground . Having said that, U.S. coal exports .
The investment has been in part driven by a desire to expand its assets portfolio renewable assets and to add energy, according head of resources in the pension fund, Avik Dey. Stakes are in traditional gas and oil energy investments.
“Calpine owns and operates one of the most effective fleets of natural gas power plants in the U.S. serving critical markets in California, Texas and the Eastern U.S.” Mr. Dey said in a statement. “Coupled with the reliable generation of renewable geothermal energy, Calpine’s modern approach to energy generation is ideally positioned for continuing success.”
Calpine’s CEO Thad Hill said that the company was exploring a sale of the company for many months. “Regardless of what we think to be a strong history of implementation, strong cash flows and a excellent asset base, our share price remained much below what we viewed as fair price,” Mr. Hill said on a conference call at the moment.
After reaching a high of more than $24 at 2014, the corporation’s share price was languishing in a price point of less than $15 annually, although even that cost was fostered by the rumours of a sale, the Houston-based firm said in a statement. Investors are provided $15.25 per share under the terms of the offer.
The transaction remains subject to some 45-day “go-shop” interval in addition to shareholder and regulator approvals and other closing conditions, but the investors predict that the transaction will close in the first quarter of 2018.