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Carlyle is exploring a sale of power producer Cogentrix Energy, one of the largest developers of power plants in the US, as a wave of deals for utilities accelerates because of soaring energy demands from digital networks.
Carlyle has hired advisers to explore a sale of Cogentrix that could value the North Carolina-based company at as much as $3bn to $4bn, generating a large windfall for the private capital group’s infrastructure arm, said three people briefed on the matter. Carlyle is also selling other power assets owned by its infrastructure business in separate processes, the people said.
Investment bank Lazard and law firm Latham & Watkins have been hired to advise on the sale, said people briefed about the matter.
Carlyle declined to comment. Lazard and Latham did not immediately respond to requests for comment.
Cogentrix owns majority and minority stakes in about 73 gas, coal, wind and renewable projects and sites, according to the company’s website. Carlyle acquired the group from Goldman Sachs in 2012 and the power producer has roughly doubled its assets, acquiring or buying stakes in projects that included oil drilling sites in Texas, hydroelectric power plants in Massachusetts and wind farms in upstate New York.
Investment bankers and lawyers say investors are increasingly looking to buy and invest in power plants, which generate electricity that is later sold to utilities. That wave of dealmaking has been in part spurred by speculation that data centres and digital infrastructure used to power artificial intelligence will spark an unprecedented demand for power, straining the energy supply.
Last month, Global Infrastructure Partners and Canada’s largest pension fund, CPP Investments, broke a lull in utility dealmaking with a $6.2bn take-private of the Minnesota-based Allete. GIP and CPP Investments said they planned to fund large investments in new sustainable power generation.
Brookfield late last month confirmed it is in talks to acquire French renewable power producer Neoen at €6.1bn valuation in what is expected to be one of the larger European takeovers of this year.
The Canadian asset manager earlier this year surprised many investors when its renewable energy operations struck a large partnership with Microsoft to build 10.5 gigawatts of renewable power generation capacity for the technology giant. The deal will probably amount to more than $10bn of total investment, a sign of the significant challenges large technology groups face in procuring power supplies, particularly energy from renewable sources.
