On March 4th, private equity firm KKR & Co. (NYSE: KRR) announced an agreement with NextEra Energy Partners, LP (NYSE: NEP) to buy an equity stake in a newly formed partnership between the companies that owns ten United States wind and solar power farms. KKR will provide $900 million for NEP to buy the portfolio of plants for about $1.02 billion.
THE FALL – IN PRICE – OF RENEWABLE ENERGY
Initially private equity investors avoided renewable energy projects because they believed the industry was overvalued. Recently, that has changed. Private equity firms are now beginning to better understand the renewables sector and are attracted to renewables’ seemingly large immunity to economic cycles.
KKR ACQUIRES GEOSTABILIZATION INTERNATIONAL
On November 19th, private equity mega fund KKR & Co. (NYSE:KKR) announced an agreement to acquire GeoStabilization International (GSI) from Canadian private equity firm CAI Capital Partners. GSI is an infrastructure services company that specializes in geohazard mitigation. Their services include landslide repair, bluff stabilization, and rockfall mitigation.
ASSALA ENERGY ACQUIRES SHELL’S GABON ASSETS
Carlyle Group backed Assala Energy announced March 24th they would be acquiring Royal Dutch Shell’s onshore assets in Gabon, Africa for $587 million. Shell has recently sold its North Sea assets to private equity-backed Chrysaor for $3.8 billion. These sell offs have been steps in Shell’s $30 billion disposal program, which was started after the $54 billion merger with BG Group.
FOREIGN PLAYERS BANK ON MEXICO’S OFFSHORE OIL
On March 18, 1938, Mexican President Lázaro Cardenas expropriated the assets of nearly all of the foreign oil companies operating in Mexico. Later, he created Petróleos Mexicanos, or Pemex, a state-owned oil firm that held a monopoly over the Mexican oil industry and prevented all foreign oil companies from operating in Mexico. Now, nearly 80 years later, current President Enrique Peña Nieto is on the brink of one of Mexico’s most radical economic changes in the last five decades.
PRIVATE EQUITY FIRMS IN THE ENERGY INDUSTRY
In the last decade, the United States saw a tremendous shale-drilling boom in which private equity firms were among the most aggressive financiers. Seeing great potential returns due to increasing production, many investors financed the shale boom, but did so with the price of $100 per barrel of oil in mind. In the long run, the shale boom produced market-flooding supplies of oil and gas and was a factor in oil prices crashing to $45 a barrel in 2014.