Fundraising

Starwood to acquire two California power plants

The energy-focused private equity firm has agreed to buy Greenleaf 1 &2, two gas-fired power plants in Sutter County, previously operated by Calpine Corp.

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Starwood Energy Group Global has agreed to buy two natural-gas fired cogeneration plants in California that will add 100MW to its existing portfolio, the Greenwich, Connecticut-based private equity firm said in a statement.

Starwood will be acquiring Greenleaf 1 & 2 – each plant has a generating capacity of 49.5MW – from affiliates of Mitsubishi UFG Financial Group (MUFG) for an undisclosed amount. The Japanese financial group acquired the plants when the share and leaseback agreement it had with independent power producer Calpine Corporation, expired last June. 

Starwood did not disclose through which of its vehicles it would be making the investment nor how the assets fit into the firm’s value-add strategy. The firm declined to comment through a spokesperson.

According to the Connecticut firm’s statement, both Greenleaf 1 & 2 sell their capacity and energy under power purchase agreements with Pacific Gas & Electric. It did not specify when these PPAs expire.

An affiliate of private real estate investment firm Starwood Capital Group, Starwood Energy invests primarily in natural gas, renewable electricity generation and power transmission with equity investments typically ranging from $25 million to $100 million or more.

The firm has raised two general opportunity funds, the most recent – Starwood Energy Infrastructure Fund II (SEIF II) – closing on $983 million in January 2014 and beating its initial target of $750 million. SEIF II will target renewable energy assets in North America.

Its predecessor, Starwood Energy Infrastructure Fund I held its final close on total commitments of $483 million. The fund has invested in projects such as the Hudson Transmission Project, a 600-megawatt (MW) transmission line in New Jersey; the 69MW Starwood SSM Project, a solar photovoltaic plant in Ontario, Canada; the Starwood Midway, a 120MW simple-cycle peaking plant in California; and the 272MW Thermo Facility combined-cycle power plant in Denver, Colorado.

Through these two funds and other affiliated investment vehicles, Starwood Energy manages total equity commitments of more than $2 billion and has executed transactions totalling more than $4 billion in enterprise value.