US private equity major Carlyle Group is to sell Cogentrix Energy, one of the largest portfolios of natural gas power plants in the US, to Houston-based PE firm Quantum Capital Group, which specialises in energy investments, for $3bn, according to a report by the Financial Times.
Cogentrix Energy, headquartered in North Carolina, owns 11 natural gas power plants in Texas, Pennsylvania and the New England region. Carlyle initially acquired Cogentrix from Goldman Sachs in 2012 for an undisclosed sum and has since doubled the company’s assets by purchasing new power plants and expanding its operations.
Wil VanLoh, founder and CEO of Quantum Capital, said: “Electricity demand is rapidly increasing thanks to explosive growth in data centres and AI, the reshoring of manufacturing, and the electrification of everything. This is an opportunistic purchase, and we plan to support the growth of the business.”
With electricity demand rising after two decades of stagnation, driven by the expansion of data centres and the digital infrastructure required for artificial intelligence, investors are increasingly seeking opportunities to acquire and invest in power plants.
Global Infrastructure Partners, Canadian pension fund CPP Investments, and Brookfield have all backed multibillion-dollar transactions in recent months, betting on improved returns from a sector that has historically been considered stable but unexciting.
Despite divesting Cogentrix, Carlyle remains committed to the energy sector. Pooja Goyal, Chief Investment Officer of Carlyle’s infrastructure group, said: “The biggest bottleneck right now is power generation capacity, as well as transmission and distribution capacity. We will continue to be very active in those areas through our existing portfolio companies, as well as new investments that we make.”
The transaction was facilitated by boutique investment bank Lazard and law firm Latham & Watkins, whom Cogentrix hired to explore the sale, as reported by the Financial Times in June.
