TransCanada Corp. is working with JPMorgan Chase & Co. to find buyers for more than $7 billion in assets to help finance its acquisition of Columbia Pipeline Group Inc., people with knowledge of the matter said.
The people asked not to be identified because the information is private. Assets for sale include a portfolio of U.S. Northeast merchant power plants and a minority stake in TransCanadaâ€™s Mexican natural gas pipeline business.
The value of the combined assets is estimated to be $7.1 billion, according to Moodyâ€™s Investors
The merchant power assets for sale rely on wholesale electricity markets, rather than contracts, for their profits. Among facilities up for sale are the Ironwood natural gas power plant in Pennsylvania, Ravenswood gas- and oil-fired generation plant in New York, hydroelectric power assets in New England, the Kibby wind power operation in Maine and Ocean State Power gas generation facilities in Rhode Island.
Selling TransCanadaâ€™s U.S. Northeast power portfolio is the best option to generate the funds needed to acquire Columbia Pipeline, Grady Semmens, a spokesman for TransCanada, said in an e-mailed response to questions about the sales process.
â€œThis is a high-quality business that has served our shareholders well for many years,â€ Semmens said.
Representatives from JPMorgan, Riverstone, Calpine, Macquarie and D.E. Shaw declined to comment, while representatives from Blackstone and NRG didnâ€™t immediately respond to requests for comment.
Private equity investors are better equipped to purchase the assets, Miller said, because publicly traded companies are generally short on capital to spend on merchant power thatâ€™s out of favor with their shareholders.
â€œThe private equity space right now benefits from relatively low cost of capital and risk appetite, so thatâ€™s where we see the most likely buyers for merchant assets,â€ Miller said.