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Renewable portfolios drive utility M&A in Q3'18; Morgan Stanley tops advisers

Editor's note: S&P Global Market Intelligence has reclassified industries according to the Global Industry Classification Standard. The league table data dispatch articles are now based on the new industry classification and are not comparable with 2017 and prior league table data dispatch articles.

Merger and acquisition activity among utilities was relatively quiet in the third quarter of 2018, with some of the biggest deals involving renewable portfolios.

Funds controlled by Macquarie Infrastructure Partners Inc. are selling their ownership interest in Puget Sound Energy Inc. The Puget Holdings LLC utility announced Aug. 8 that it would file with Washington state regulators for approval of the transaction, valued at $3.15 billion, under which the Macquarie funds' 44% noncontrolling interest in the utility would be disbursed to four parties.

Two existing owners, Alberta Investment Management Corp. and British Columbia Investment Management Corp., will increase their stakes in Puget Sound Energy, while OMERS Infrastructure Management Inc. and PGGM Coöperatie U.A. are acquiring new interests. The Canada Pension Plan Investment Board will retain its 31.6% interest and will become Puget Sound's largest single stakeholder.

The Washington Utilities and Transportation Commission and the Federal Energy Regulatory Commission must authorize the deal. Barclays Capital Inc. is the financial adviser to the investor group. Moelis & Co. LLC and Macquarie Capital (USA) Inc. are serving as financial advisers to Macquarie, with Latham & Watkins LLP as legal counsel.

Other notable deals in the third quarter included two portfolios of renewable assets. Consolidated Edison Inc. announced Sept. 20 plans to acquire 981 MW of solar assets from Sempra Energy in a transaction valued at $2.12 billion. If approved by FERC and other regulators, Consolidated Edison would nearly double its solar holdings.

Another significant portfolio transfer was among NextEra Energy Inc. subsidiaries, when its yieldco NextEra Energy Partners announced an agreement to acquire a 1,388-MW slate of wind and solar projects from competitive generator NextEra Energy Resources LLC in a transaction valued at $1.31 billion. The deal must be approved by FERC and others, and executives have said NextEra Energy Partners could engage in third-party M&A to complement the purchase.

Morgan Stanley was the top financial adviser for utility M&A through the third quarter of 2018, guiding six deals with a total transaction value of $24.3 billion. Coming in second was Credit Suisse (USA) Inc., with seven deals and $17.62 billion in total transaction value. Rounding out the medal podium was Goldman Sachs & Co. LLC, with five deals and $15.51 billion in total transaction value.

Among utility M&A legal advisers, Jones Day finished through the third quarter in the top spot, facilitating eight deals with a total transaction value of $23.05 billion. McGuireWoods LLP was in second with three deals and $15.67 billion in total transaction value, and Mayer Brown LLP was in third with one deal and $14.35 billion in transaction value.

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