Calpine Corp’s $16.4bn sale to Constellation Energy is set to deliver a major windfall to its owners offering optimism in the private equity sector that similar mega-deals could help an industry grappling with sluggish investor payouts, according to a report by Reuters.
The report cites unnamed sources familiar with the matter as revealing that the deal, struck by Energy Capital Partners (ECP), CPP Investments, and Access Industries, is expected to yield approximately four times the initial investment for the trio and their limited partners.
The 10 January agreement is not only the largest transaction in the US power sector in nearly two decades, but it also significantly impacts ECP’s portfolio, liquidating around a quarter of its $5bn third flagship fund and stakes in other vehicles, two sources revealed.
Deals of this magnitude remain uncommon in the buyout world. According to data from Dealogic, between 2020 and 2024, only 27 private equity sales exceeded $10bn out of nearly 2,900 US divestitures.
Notable 2024 examples include GTCR and Apax Partners’ $13.45bn sale of AssuredPartners to Arthur J Gallagher and Home Depot’s $18.25bn acquisition of SRS Distribution from Leonard Green & Partners and Berkshire Partners.
Such high-profile transactions are gaining prominence as private equity firms face challenges selling assets acquired during the low-interest-rate boom of the late 2010s. Industry players hope that more favourable market conditions in 2025 will accelerate dealmaking and ease pressure from investors eager for returns.
“It’s looking like 2025 is going to have a lot of the right conditions,” said John Grand, Co-Head of Corporate Practice at law firm Vinson & Elkins. “Public equities seem overvalued, so people are seeking private deals. Interest rates are declining, and there’s political stability for the next few years.”
