Energy Capital leads $5.6bn acquisition of Calpine

Consortium buying the US power generator includes CPPIB, which committed $750 million.

Energy Capital Partners has agreed to a $5.6 billion deal to acquire US-listed power generator Calpine Corporation in another shake-up in the country’s natural gas industry.

The deal is worth $15.25 per share for the Houston-headquartered company, one of the largest natural gas power generators in the US. Energy Capital led a group of investors including Canada Pension Plan Investment Board, which committed $750 million.

Calpine now has a 45-day “go-shop” period to hear proposals for better offers. If an improved deal is negotiated, Calpine must pay the Energy Capital consortium a $142 million fee.

The company has 80 power plants in operation or under construction and a 26GW generation capacity. Last October, Calpine purchased electricity distribution company Noble Americas Energy Solutions in a $900 million deal.

It’s been an active year so far in the US natural gas market. Expanding production, declining prices and the proliferation of renewable energy has led a wave of natural gas generators to seek consolidation or backing from investors.

Last year, Energy Capital joined Dynegy in a $3.3 billion deal to purchase Engie’s US power portfolio. The private equity firm sold its stake to Dynegy before the deal closed.

Earlier this month, CPPIB partnered with Allianz Capital Partners to seal a deal worth €1.5 billion to buy 20 percent of Gas Natural Fenosa’s Spanish gas distribution business.

Energy Capital and CPPIB couldn’t immediately be reached for comment.