UBS Asset Management’s Archmore International Infrastructure Fund II is to acquire a 10.8 per cent interest in CPV Towantic Energy Centre (CPV Towantic), a 785-megawatt combined-cycle power generation facility currently under construction in Connecticut, marking the Fund’s second investment in the US market and fifth investment in the Fund.
The interest is being acquired from a General Electric unit, GE Energy Financial Services (GE). GE will retain a 24.5 per cent stake in the project with the other partners in CPV Towantic being affiliates of Ullico Inc. (13.7 per cent) and Competitive Power Ventures (CPV) (51.0 per cent).
The completed state-of-the-art CPV Towantic facility will sell energy, capacity and ancillary services into ISO-New England, one of the most developed power markets in the United States serving over 6.5 million businesses and households across six states in the New England region. The facility has fixed capacity pricing for the first seven years of operations providing it with stable cash flow over that period.
Utilizing the latest generation of GE turbines, construction of the plant is being undertaken by GE and Gemma Power Systems, with oversight by CPV. Construction is approximately 65 per cent complete with commercial operations due to commence prior to June 1, 2018.
Once operational, the facility will benefit from being the most efficient of its kind in the region; advantageous gas supply and pricing; dual-fuel capability; close proximity to electrical demand areas in the south-west of the state; and the region’s high barriers to entry for the development of a facility of this kind. GE will provide major maintenance for the equipment it supplies, North American Energy Services (NAES) will provide operations and maintenance for the balance of plant, while CPV will act as asset manager.
The acquisition is expected to close by mid-September, 2017.
Floyd Gent, Head of Infrastructure Equity Americas at UBS Asset Management’s Real Estate & Private Markets Business (REPM), says: “This transaction provides us with access to a state-of-the-art energy facility with the capacity to provide ultra-efficient and reliable power to a significant market over the long-term. The payment structure will deliver us with stable and attractive cash flows alongside our reputable new partners in this venture, who each demonstrate impressive track records in the energy space. CPV Towantic builds on UBS-AM’s extensive experience in owning and managing power assets in the region, including Northern Star Generation and Western Generation Partners portfolios.”
Tommaso Albanese, Head of Infrastructure, REPM, adds: “This investment is fully aligned with the Fund’s strategy, delivering our clients with long-term, sustainable income streams from a core infrastructure asset that is located in a strong economy. This transaction, negotiated on an exclusive bi-lateral basis, is a clear example of the sort of opportunities we source from our broad network to offer investors access to a wide spectrum of infrastructure investment opportunities.”