Ares Management has divested four coal-fired power plants from a portfolio of generation assets it acquired in 2007 and now has almost completely exited.
Starwood Energy Group agreed to buy the 1.2GW power plant bundle, which includes coal assets in New Jersey, West Virginia and Arkansas. Starwood did not reply to a request for comment.
The firm is known to be raising its third energy infrastructure fund, Starwood Energy Infrastructure III, which has a $1.5 billion hard-cap and is reportedly expected to reach final close by year-end.
For Ares, Warren MacGillivray, a partner for the firm’s energy infrastructure team, said in a statement the deal is part of their overall strategy of “acquiring, optimising and then divesting projects for the benefit of our long-term investors”.
Ares manages five funds investing in power and energy infrastructure, focusing on electricity generation, transmission facilities and midstream assets.
Earnings documents for the Los Angeles-based firm show its US power and energy infrastructure funds are not hitting Ares’ desired 15 percent to 17 percent net return targets. The $1.7 billion EIF United States Power Fund IV posted a 9.5 percent net IRR and a 1.3 times net money multiple as of 30 June, and the $1.35 billion United States Power Fund III recorded a 5.9 percent net IRR and a 1.4 times net money multiple.
In August, Ares announced its EIF V fund closed at just more than $800 million, short of its $2 billion target.
Ares did not reply to a request for comment.