Apollo Global Management has agreed to buy a 50% stake in Broad Reach Power from its existing owners, the parties said, a deal which will result in up to $400 million of capital being invested in the U.S. energy storage and renewables company to fund expansion.

Founded in 2019, Broad Reach is owned by private equity duo EnCap Investments and Yorktown Partners and commodity trading firm Mercuria. As part of the deal, to be formally announced later on Nov. 22, the trio will put in extra capital, which will form part of the $400 million investment figure.

Houston-based Broad Reach owns or is constructing around 1.4 gigawatts hours of energy storage capacity and a 21 gigawatt portfolio of utility-scale wind, solar and energy storage power projects across the United States.

While renewable power has grown to 20% of the U.S. generation mix, effective energy storage capabilities are needed so that power can be supplied when the sun is not shining or the wind is not blowing.

"The shift to more intermittent clean energy increases volatility and drives demand for energy storage," Geoff Strong, co-head of infrastructure and natural resources at Apollo, said in a statement. "Broad Reach has a scaled, high-performing platform that is well positioned for strong continued growth."

The deal is the first sale for EnCap's $1.2 billion energy transition fund. It was the first fund dedicated to clean energy that was raised by the private equity firm - traditionally known for oil and gas investing.

Citigroup Inc and White & Case LLP served as financial and legal advisers, respectively, to Broad Reach and EnCap. Law firm Kirkland & Ellis LLP worked with Apollo. 

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