BBIP to buy Alkane Energy

The UK-listed investment firm will acquire the independent power generator for £61.4m.

Balfour Beatty Infrastructure Partners (BBIP), the London-based fund manager backed by UK developer Balfour Beatty, is set to acquire independent power generator Alkane Energy for £61.4 million (€84.5 million; $95.4 million) in cash.

BBIP, through its buyout vehicle Barbican Bidco, has offered 36 pence for each Alkane share, representing a 44 percent premium to Alkane’s closing price of 25 pence on September 15 and a 59.5 percent premium to the stock’s average price of 22.57 pence over the past six-month period.

According to a document released by both parties, Alkane Directors, who consider the terms of the offer to be “fair and reasonable”, will be recommending the company’s shareholders accept the offer.

“[This] offer enables Alkane shareholders to realise value today in cash for their shares at a significant premium to the recent historical share price, which in the board’s view, has been impacted by negative sentiment towards the energy industry and continued regulatory scrutiny,” Alkane chairman Roger McDowell said.

An operator of mid-sized gas power plants, Alkane has a total of 145 megawatts (MW) of installed generating capacity and an electricity grid capacity of 160MW. It also operates a portfolio of coal mine methane sites extracting gas from abandoned coal mines.

BBIP reckons Alkane’s appeal lies in its flexibility and diversification of generation. “We see great opportunity in the business and believe BBIP is an excellent partner to support the next phase of Alkane’s development,” BBIP managing partner Rob Gregor said in a statement.

News of the acquisition comes just a few months after BBIP added another asset to its portfolio: Wightlink Ferries, a ferry service that links the Isle of Wight with the southern coast of England. BBIP acquired Wightlink Ferries in February from Macquarie European Infrastructure Fund (MEIF) for an undisclosed sum.

BBIP was formed in 2011 and completed its first investment in March 2013. It targets operational assets in the transport, energy and utilities sectors across the UK, Europe and North America. The firm states that it operates independently from its sponsor Balfour Beatty.

In addition to Wightlink Ferries, BBIP’s current portfolio comprises the Upper Peninsula Power Company (UPPCO), a regulated US electric utility; and McEwan Power, a portfolio of 10 UK-based solar parks with a total generating capacity of 71 megawatts.

According to the document, the commitments of the investors in BBIP as of September 15 totalled approximately $618 million, more than half than the $1 billion BBIP is looking to raise for its debut fund.