From Toronto's Globe and Mail, home of the other big partner, the Canada Pension Plan Investment Board, May 6:
CPPIB co-leads partnership acquiring U.S. utility Allete in $6.2-billion deal
U.S. utility Allete (ALE-N) aid on Monday that it had agreed a deal with investment firms Global Infrastructure Partners and CPP Investments to be taken private at a US$6.2-billion valuation, inclusive of debt.
The transaction is a rare example of a U.S. utility being taken private by investment firms, and comes at a time when such companies are receiving increased investor interest as technological innovations, such as artificial intelligence and data centres, boost power demand.
For utilities such as Allete, this hunger for power comes as they are implementing a shift to greener forms of generation, creating the need for significant investment in their networks.
Allete chief executive officer Bethany Owen told Reuters that the Minnesota-based company’s strategy involved spending US$4.3-billion on renewables over the next five years, and further billions on investments after that. Raising these sums, while being a smaller utility in the public markets, would have been challenging.
“We were looking for the right partners to provide ready access to capital so that we could execute that transformative strategy,” said Ms. Owen, who will continue in her role after the transaction closes in mid-2025.
The cash offer of $67 per share for Allete represented a 19-per-cent premium to the company’s closing share price on Dec. 4, a day before Reuters reported the power company was exploring a sale.
“This is a modest premium on several angles,” said Guggenheim utilities research analysts, adding this “unique” deal would not set a precedent for other go-private deals....
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The CPPIB is large x large, C$590.8 billion AUM.
And previously on GIP:
December 2022: Private Equity: "For infrastructure, KKR sees 'incredible' opportunities in digital, energy assets"
January 2024: BlackRock Goes Large-by-Large In Infrastructure (BLK)"
January 2024: "Investors look set to pour cash into infrastructure following BlackRock acquisition" (BLK)
January 2024: "BlackRock Acquisition Triples Its Business of Building Airports, Roads, and Utilities"
