GE Energy Financial Services is selling its nearly 25% stake in a 3,155.6-MW portfolio of gas-fired projects to The Carlyle Group LLC as part of a broader restructuring that also includes the sale, announced Oct. 8, of a raft of renewable and gas-fired assets to funds managed by Apollo Global Management LLC.
A week earlier, Washington, D.C.-based Carlyle filed for approval with the Federal Energy Regulatory Commission to take full ownership of Southeast PowerGen LLC, a portfolio company that owns six gas-fired assets in Georgia, buying out GE Energy Financial Service's 24.95% stake.
The Southeast PowerGen portfolio's largest asset, the 745.2-MW Washington County facility, sells a portion of its output to Central Georgia Electric Membership Corp. and Snapping Shoals El Member Corp under long-term tolling agreements that run through 2040. The project sells its remaining output to Southern Co. subsidiary Georgia Power Co. under a long-term tolling agreement that expires in 2024.
The portfolio also includes the 677.4-MW Sandersville Energy Facility in Washington County, which has two long-term tolling agreements for 150 MW each with Morgan Stanley Capital Group Inc. that run through 2025 and 2030, respectively, according to the FERC application.
The 527-MW Effingham County facility is the only entirely-merchant project in the bundle. The 525-MW Walton County Project and the 351-MW Monroe Power project each have long-term tolling agreements with Georgia Power that expire in 2024. The 330-MW Mid-Georgia Cogeneration plant in Houston County also sells its output to Georgia Power under a power purchase agreement that runs through 2028.
Southeast PowerGen had previously leased the Washington and Effingham assets from two local government entities before unwinding the lease agreements and taking ownership of the plants in June.
However, the company's ownership of Washington is not expected to last long. On May 1, Southeast PowerGen requested FERC authorization to sell the project, once it formally obtained ownership, to Gulf Pacific Power, an investment fund managed by Harbert Management Corp.
The California Public Employees' Retirement System is the majority-investor in Gulf Pacific with 97.9%. FERC approved the eventual sale of Washington to Gulf Pacific in June.
Carlyle acquired its 75.05% position in Southeast PowerGen in 2014, purchasing ArcLight Capital Partners LLC's 50.1% stake, as well as a 24.95% shareholding from a subsidiary of Singapore sovereign wealth fund GIC Pte. Ltd. GE Energy Financial Services already owned its position in Southeast PowerGen at the time of the deal.
Sale processes ongoing
The Apollo and Carlyle deals come as General Electric Co. division GE Capital Corp. is divesting equity interests in various power projects as part of an extensive corporate reorganization aimed at jettisoning noncore assets and growing the company's balance sheet.
In May, GE Capital hired Bank of America Corp.'s investment banking arm, Bank of America Merrill Lynch, to market its equity stakes in generation assets and mandated Citigroup Global Markets Inc. to sell its project finance debt platform.
According to an Oct. 8 announcement, Apollo Global Management LLC has agreed to acquire an approximately $1 billion portfolio of energy assets from GE Energy Financial Services.
In addition to Bank of America Merrill Lynch, PJT Partners Inc. also advised GE Capital on the Apollo deal, with Gibson Dunn & Crutcher and Latham & Watkins acting as legal advisers.
Details about the assets to be acquired by Apollo were not disclosed, though GE Capital and Apollo, in statements issued Oct. 8, said the projects include renewable and gas-fired facilities, as well as midstream assets, and are located largely, but not exclusively, in the U.S.
Spokespeople for GE Capital and PJT declined to comment.
Citigroup was lead financial adviser to Apollo, with RBC Capital Markets and Goldman Sachs & Co. LLC also advising, and law firms Paul Weiss Rifkind Wharton & Garrison LLP, Milbank Tweed Hadley & McCloy LLP and Vinson & Elkins LLP providing legal counsel.
RBC, Goldman Sachs and Bank of Montreal are providing Apollo with acquisition financing.
Debt business sold
GE Capital announced a deal to sell its project finance debt business in August to Starwood Property Trust Inc. for $2.56 billion.
That purchase includes a debt book comprising 51 senior loans secured by energy assets and $400 million of unfunded loan commitments.
The sale of the debt platform has also resulted in the migration of 21 full-time employees from GE Energy Financial Services to Starwood Property Trust and the naming of Denise Persau Tait, formerly managing director and global head of project finance debt at GE Energy Financial Services, as president of Starwood Infrastructure Finance.
Shearman & Sterling LLP advised GE Capital on the sale of the debt business.