OMERS buys stake in Texas T&D system

subscribe

The Ontario Municipal Employees Retirement System (OMERS) is buying 10 per cent of the largest electricity distribution and transmission system in Texas for $627-million (US), its first major investment in this part of the power sector.

Government of Singapore Investment Corp. (GIC), a sovereign wealth fund, is also part of the investment group, which in total will purchase just under 20 per cent of Dallas-based Oncor Electric Delivery Co. LLC for $1.25-billion (US).

Oncor is owned by holding company Energy Future Holdings Corp. (EFH), also of Dallas, which changed its name from TXU Corp. when it was purchased by a private equity group last year for $32-billion.

As part of the acquisition, which closed last October, the new owners, including Kohlberg Kravis Roberts & Co., Texas Pacific Group and Goldman Sachs Group Inc., said they planned to sell a 20-per-cent minority stake in Oncor.

Because Oncor is a regulated entity, there was concern about the impact the debt involved in the private equity buyout would have on the company. The goal of selling a minority stake was to give Oncor greater financial separation from the rest of EFH, a company representative said.

EFH's other divisions include a retailing arm, and a generation business that encompasses mining, marketing and trading.

After the sale, Standard & Poor's Corp. raised its credit rating for Oncor by two notches, to triple-B plus from triple-B minus.

This independent vote of confidence will strengthen Oncor's ability to invest billions of dollars in infrastructure in Texas over the next several years, Oncor chief executive officer Bob Shapard said in a statement.

OMERS, one of Canada's largest pension plans, has more than $52-billion (Canadian) invested in companies and assets around the world. It is making the investment in Oncor through one of its investment arms, Borealis Infrastructure Management.

While this is its first big foray into electricity transmission and distribution, OMERS already has more than $2-billion invested in the power sector. Its largest investment in this area is a 31.6-per-cent interest in the lease of nuclear power facilities operated by Bruce Power. of Tiverton, Ont.

Many investors, including Canadian pension funds, have been buying power assets around the world for their long-term, stable cash flow, and high barrier to entry for competitors.

In addition to Oncor's strong fit with OMERS' investment objectives, the pension fund was also interested in striking another partnership with GIC, OMERS spokesman John Pierce said.

The acquisition of the minority stake in Oncor by OMERS and GIC is subject to U.S. regulatory approvals.

Related News

powerline worker

Global push needed to ensure "clean, affordable and sustainable electricity" for all

NEW YORK - The seventh Sustainable Development Goal (SDG), SDG7, aims to ensure access to affordable, reliable, sustainable and modern energy for all.  

However, those nations which remain most off the grid, are set to enter 2030 without meeting this goal unless efforts are significantly scaled up, warns the new study entitled Tracking SDG 7: The Energy Progress Report, published by the International Energy Agency (IAE), International Renewable Energy Agency (IRENA), UN Department of Economic and Social Affairs (UN DESA), World Bank, and World Health Organization (WHO). 

“Moving towards scaling up clean and sustainable energy is key to protect human health and…

READ MORE
canadian protest

How Canada can capitalize on U.S. auto sector's abrupt pivot to electric vehicles

READ MORE

Minnesota Power Northern Transmission Line

Minnesota Power energizes Great Northern Transmission Line

READ MORE

bulgaria korea nuclear

KHNP is being considered for Bulgarian Nuclear Power Plant Project

READ MORE

wind-power-surges-in-us-electricity-mix

Wind Power Surges in U.S. Electricity Mix

READ MORE