BlackRock’s GIP and EQT make $33bn bet on electricity demand
Pair team up to purchase power plant operator AES which has struggled on stock market
BlackRock-owned Global Infrastructure Partners and EQT are buying one of the biggest listed US utilities for more than $33bn, betting on surging electricity demand.
The two private capital groups said on Monday that they will pay $15 a share for AES Corporation, in an all-cash deal that values the utility group’s equity at $10.7bn — a 40 per cent premium to the share price before reports of takeover interest first emerged last July. Including its $22.7bn of debt, the deal gives AES an enterprise value of $33.3bn.
US pension fund Calpers and Qatar’s sovereign wealth fund will also participate in the deal.
AES, which owns and operates power plants in the US and 13 other countries, has struggled on public markets in recent years despite rising investor interest in utilities following the AI boom.
Shares in AES fell 16 per cent to $14.44 in pre-market trading in New York, bringing the slide over the past five years to about 45 per cent.
The takeover comes amid a flurry of deals in the power sector, which is benefiting from surging demand linked to the AI revolution. US energy demand is projected to rise by 25 per cent by 2030, driven mainly by rapid data centre expansion and increased electrification, according to research by consulting firm ICF.
Private equity-owned power producer Calpine was sold to Constellation Energy for nearly $30bn last year, while Blackstone last year struck an $11.5bn deal for TXNM, a large utility in the US south-west.
GIP itself has already been an active buyer of utility companies, striking a $6bn-plus deal in 2024 to acquire Allete, a utility based in Minnesota, although that deal is yet to close.
AES has invested heavily in recent years in renewable energy grids, which play a crucial role in supplying power to data centres owned by technology giants such as Microsoft, Meta and Alphabet.
Infrastructure investment groups are now betting that they can increase the capacity of utilities outside the scrutiny of public markets to help meet surging power demand.
GIP and EQT said on Monday they planned to continue expanding AES’s renewable operations and that the deal would offer “financial flexibility” to invest in new power plants.
Listed utilities such as AES pay large dividends to investors, sometimes creating the challenge of balancing new investment with payouts.
GIP and EQT have also bet heavily on data centres in recent years and are among the world’s largest investors in such facilities. Late last year GIP struck a $40bn deal to buy private data centre operator Aligned Data Centers, in the sector’s largest takeover.
GIP co-founder Adebayo Ogunlesi said: “AES is a leader in competitive generation, and at a time in which there is a need for significant investments in new capacity in electricity generation, transmission and distribution, especially in the United States.”