Energy Capital Partners (ECP) raised $6.7 billion to invest in renewables and power generation, exceeding expectations with the close of its fifth flagship fund, the private equity firm said May 28.

The fundraise completion was announced the same day ECP shared news of Fund V’s latest investment: the $2.6 billion take-private acquisition of NASDAQ-listed Atlantica Sustainable Infrastructure, a renewable and power company with a portfolio of 2.2 gigawatts of operating assets in the Americas and Europe.

New Jersey-based ECP said its ECP V (Fund V) secured capital commitments of $4.4 billion plus an additional $2.3 billion of co-investment capital. The fund plans to continue investing in companies focused on power generation, renewable and storage assets and critical sustainability and decarbonization infrastructure, according to ECP.

The investors, new and existing, included public and private pensions, insurance companies, asset managers and family offices.

“The successful final close of ECP V represents a milestone for our firm and demonstrates the strong support and confidence from our LPs around the world,” said Emily Zovko, head of investor services and managing director at ECP. “ECP’s focused efforts to build, execute, and ultimately drive value from a robust pipeline of investments tied to electrification, decarbonization, reliability and sustainability remain at the center of ECP’s success as it has for the last 19 years.”

Making moves

ECP’s deal to acquire Atlantica pays the publicly traded company $22 per share — a 21.8% premium to the company’s 30-day volume weighted average trading prices as of April 22.

Compared to its April 22 closing share price, the premium is 18.9% premium.

The deal is subject to approval by Atlantica’s shareholders among other conditions. The transaction is expected to close in fourth-quarter 2024 or early first-quarter 2025.

Algonquin Power & Utilities (AQN) and its subsidiary Liberty (AY Holdings), which hold about 42.2% stake in Atlantica, said they support the deal.

The deal, which values Algonquin’s stake at about $1.08 billion, followed a strategic review of Atlantica’s assets.

“The exit of our financial investment in Atlantica is another step forward in our strategic transition as we simplify our structure and focus on becoming a pure-play regulated utility,” AQN CEO Chris Huskilson said.

Atlantica CEO Santiago Seage said the company plans to continue its growth strategy as a private company with support from its new partners.

“ECP has a long track record and expertise in the sustainable infrastructure sector and, together with its global co-investors, will enhance Atlantica’s ability to finance and deliver growth while maintaining our focus on safety, sustainability and value creation” Seage said.

Other investments made by ECP’s Fund V have included the take-private of Biffa, a U.K.-based waste management business, and investment in biofuels platform Harvestone.

Making commitments

Private equity investors have been active in the energy transition space, spurred in part by incentives in the Bipartisan Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Energy infrastructure has been among the areas getting attention.

Earlier this month, Houston-based EnCap Energy Transition’s Fund II (EETF II) said it secured $1.5 billion in commitments to fuel low-carbon investments with the closure of its latest fund. With a focus on low-carbon fuels, carbon management and low-carbon power infrastructure, the fund has already invested in five companies and has plans to increase that to between eight to 10 portfolio companies total.

In late April, the BlackRock and Temasek joint venture, called Decarbonization Partners, marked the close of its inaugural late-stage venture capital and private equity investment fund aimed at advancing clean technology—at $1.4 billion.

ECP said it has been investment in the power space since the firm was formed in 2005. Among its biggest deals to date was the $17 billion purchase of powergen company Calpine Corp. in 2018, which it took private.

“The electricity sector is transforming into a major growth area for both the U.S. and global economy, with forecasts projecting that electricity demand will skyrocket by 1.5-2x over the next 15 years from current levels,” said Doug Kimmelman, founder and senior partner of ECP. “This growth is being driven by converging demand from factors such as data centers, electric vehicles, onshoring of manufacturing and electrification. At this exciting time for our core sectors, we are pleased to have the abundant capital and decades-long specialized experience needed to capitalize on opportunities and create value for our firm and investors.”

Comments