Warburg Pincus, Tenaska to sell power plants for $856m

The duo will sell three jointly-owned US power plants just a year after their purchase, in addition to a fourth facility owned solely by Tenaska.

Warburg Pincus and Tenaska Capital Management have agreed to sell four US power plants to London-based energy company International Power for $856 million (€550.6 million).

International Power will acquire Warburg Pincus and Tenaska’s jointly-held energy portfolio APT Generation, consisting of three facilities, and an additional electrical plant solely owned by Tenaska, an Omaha, Nebraska-based affiliate of energy development giant Tenaska Energy.

Tenaska and Warburg Pincus in 2007 purchased the APT portfolio from the Dominion of Richmond, Virginia for an undisclosed amount.

The duo decided to sell APT Generation after only a year of ownership based upon Tenaska’s successful sale of the 315-megawatt Common Wealth Chesapeake Power Station late last year to Tyr Energy, a Kansas-based energy plant manager.  Neither Tenaska nor Warburg was willing to disclose financial details of that transaction.

“Based on that market value point, we thought it would make sense to test the market on these assets,” Tenaska senior managing director Dan Lonergan told PEO. “We did so and had a satisfactory result.”

Both Tenaska and Warburg Pincus declined to disclose the value of the APT Generation transaction independent of the additional plant, as well as other financial details.

The APT portfolio is comprised of the 625-megawatt Armstrong Energy plant in Armstrong County, Pennsylvania; the 313-megawatt Pleasant Energy plant in Pleasants County, West Virginia; and the 616-megawatt Troy Energy Plant in Wood County, Ohio.

International Power, which has made several inroads into US energy infrastructure over the last few years, will also pick up Calumet Energy Power Stations, a 303-megawatt power plant in Chicago, Illinois.

The acquisitions are expected to be completed by the end of the third quarter.

Tenaska made the APT Generation and Calumet investments out of its debut private equity fund, which closed on $838 million in 2005. Tenaska purchased Calumet from two subsidiaries of Wisconsin Energy Corp for approximately $38 million.

Originally, Tenaska planned to partner with Boston-based buyout firm Bain Capital in co-investing their fund, but an agreement never materialised.

Asked if Warburg Pincus had replaced Bain as a co-investor, Lonergan said that Tenaska’s partnership with Warburg Pincus was a different creature than what was originally designed with Bain. He declined to comment further.

Warburg Pincus recently closed its 10th global fund on $15 billion.