ArcLight Capital Partners is a Boston-based private equity firm that specializes in asset-focused investments across the energy sector. Founded in 2001, ArcLight Capital Partners does take a greater investment focus on midstream, power and production opportunities with substantial growth potential, significant current income and meaningful downside protection,” according to ArcLight’s website.
The private equity firm just announced an acquisition agreement with Sempra Energy (NYSE: SRE), in which ArcLight will pay $332 million to takeover Sempra’s non-utility natural gas storage facilities located in the United States. The latest acquisition fits right into ArcLight Capital’s Enstor natural gas storage platform, which was acquired in 2018.
ArcLight Capital Partners Press Release:
SAN DIEGO, Jan. 2, 2019 /PRNewswire/ — Sempra Energy (NYSE: SRE) today announced that its subsidiary has entered into an agreement to sell its non-utility U.S. natural gas storage facilities to an affiliate of ArcLight Capital Partners (ArcLight) for $332 million in cash, subject to adjustments for working capital. The facilities will become part of the Enstor natural gas storage platform, which ArcLight acquired in 2018.
“Our agreement to sell our non-utility U.S. natural gas storage assets is an important component to achieving our portfolio-optimization goals we announced in June 2018,” said Joseph A. Householder, president and chief operating officer of Sempra Energy. “Completing this sale, along with the recently announced sale of our non-utility U.S. solar assets, enables us to reallocate capital to further strengthen our balance sheet and support Sempra Energy’s future growth opportunities.”
The gas storage assets included in the sale to ArcLight are the Mississippi Hub storage facility in Simpson County, Miss., with a working capacity of 22.3 billion cubic feet (Bcf) of natural gas, and the Bay Gas storage facility in Southwest Alabama, which comprises five underground caverns with a working capacity of 20.4 Bcf of natural gas.
Sempra Energy’s subsidiary currently owns approximately 91 percent of Bay Gas storage facility. Immediately prior to the sale, Sempra Energy’s subsidiary will purchase the approximate 9-percent interest from a minority owner and include it in the sale to ArcLight.
The sale of the non-utility natural gas assets to ArcLight is expected to be completed in the first quarter 2019, subject to customary closing conditions. At closing, ArcLight will own 100 percent of Mississippi Hub and Bay Gas storage facilities.
Sempra Energy’s financial advisor for this transaction is Wells Fargo Securities, LLC and its legal advisor is Jones Day.
Last month, Sempra Energy announced that it had completed the sale of its non-utility U.S. operating solar assets, solar and battery storage development projects, as well as its ownership interest in one wind facility, to Consolidated Edison, Inc. for approximately $1.6 billion in cash.
An active sales process continues for Sempra Energy’s non-utility U.S. wind assets.
ArcLight is one of the leading private equity firms focused on energy infrastructure investments. Founded in 2001, the firm helped pioneer an asset-based private equity approach to investing in the dynamic energy sector. ArcLight has invested approximately $21 billion in over 100 transactions since inception. Based in Boston, the firm’s investment team employs a hands-on value creation strategy that utilizes its in-house technical, operational, and commercial specialists and works closely with the firm’s 1,000-person asset management affiliate.
Sempra Energy, a San Diego-based energy services holding company with 2017 revenues of more than $11 billion, is the utility holding company with the largest U.S. customer base. The Sempra Energy companies’ approximately 20,000 employees serve more than 40 million consumers worldwide.