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Hedge fund with ties to former TXU CEO raises stakes in NRG, Dynegy

Carlson Capital LP, a Dallas, Texas-based hedge fund, has increased its holdings in Dynegy Inc. and NRG Energy Inc. at a time when both generators are the subject of increasing investor scrutiny.

Carlson Capital, founded in 1993 by current president and co-chief investment officer Clint Carlson, raised its equity ownership in the two power generators, according to separate filings on Jan. 30 with the Securities and Exchange Commission.

The fund and its affiliates recorded holdings equal to 8.68% of Dynegy's outstanding shares, or of 10,181,071 shares total, as of Dec. 31, 2016. That is up from a roughly 5.54% stake as of Sept. 30, 2016, according to S&P Global Market Intelligence data.

In NRG, Carlson and affiliates moved its holdings up to 5.41% in outstanding shares, or 17,077,796 shares total, as of Dec. 31, 2016, up from 4.65% the previous quarter.

Carlson declined to comment on its increased holdings in Dynegy and NRG.

Parallel investments

Carlson has widened its footprint in the merchant power sector at a time when Dynegy and NRG are advancing negotiations around distressed debt holdings, which have weighed on share prices, in addition to weaker wholesale power prices in major U.S. markets.

Earlier this month, NRG became the target of an activist campaign launched by Elliott Management Corp. and Bluescape Energy Partners LLC to reverse what the joint-investor group feels are "deeply undervalued" shares at NRG.

Spearheading that effort is former TXU Corp. CEO C. John Wilder, who is credited with initiating restructuring plans in his role executive chairman at Bluescape, which has worked with Carlson in the past on restructurings.

Carlson teamed with Wilder at Parallel Resource Partners LLC, a Houston, Texas-based upstream oil and gas private equity fund focused on extracting value from financially distressed companies and "out of favor" assets through restructuring and recapitalization, according to a presentation made by Parallel at a conference hosted by the Independent Petroleum Association of America in 2012.