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LS Power spends $925m for gas and hydro assets

Through its third private equity fund, the US firm has acquired a portfolio generating 1.5GW two months after agreeing to a $2.2bn deal with TransCanada.

A fund managed by New York-based energy company LS Power has purchased four Pennsylvania natural gas facilities and a hydroelectric station in Virginia for $925 million.

Through a subsidiary, LS Power Equity Partners III acquired the five assets from power generator FirstEnergy. The deal is expected to close in the third quarter of 2017 and is still subject to regulatory approval.

The natural gas and hydro facilities have a combined capacity of 1,527MW. The natural gas facilities are spread throughout Pennsylvania, the largest being the 638MW Springdale Generating Facility outside of Pittsburgh and the smallest, the 44MW Hunlock Creek, in the north-eastern part of the state.

The deal brings FirstEnergy’s total generating capacity to 15,380MW.

Launched in 2013, LS Power Equity Partners III quickly exceeded its initial target of $1.5 billion and closed at $2.075 billion seven months later.

Commitments to the fund include $200 million from the Alaska Permanent Fund Corporation, $100 million from the Oregon Public Employee Retirement System and $50 million from the Teachers’ Retirement System of Louisiana.

The fund, which has a five-year investment period and 10-year fund life, marks the third fundraise from the private equity division of LS Power. It had previously brought in $3.1 billion in 2006 and $1.2 billion in 2005.

LS Power’s last major deal was in November when it purchased through its subsidiary, Helix Generation, four natural gas assets in the north-eastern US from TransCanada for $2.2 billion. The assets generate a combined 3,950MW.

LS Power was founded in 1990 and owns, operates and invests in power generation and transmission infrastructure throughout the US. It has developed and acquired more than 30GW of generation assets since inception.