Natural Gas to buy power businesses for $636m(2)

Energy-focused Natural Gas Partners is set to acquire the power production and development businesses of MDU Resources Group for $636 million.

Natural Gas Partners, a Texas-based private equity firm, has agreed to acquire the North American power businesses of MDU Resources Group in a transaction valued at $636 million (€466 million).

Energy industry executive Paul Prager is a co-investor in the deal, which includes the acquisition of businesses such as Trinity Power, the provider of electricity to the state-run utility in the Republic of Trinidad & Tobago, and Centennial Power, which generates coal-fired, natural gas-fired and wind-powered energy in Montana, Colorado, California and Georgia.

Barclays Capital and Goldman Sachs have agreed to provide debt financing for the deal, which is expected to close in June and is subject to regulatory approvals.

Barclays is serving as financial advisor to Prager and Natural Gas, while Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal counsel.

Energy-related acquisitions are increasingly popular among buyout shops. Kohlberg Kravis Roberts and Texas Pacific Group are currently leading a $45-billion bid for Texas utility company TXU, the largest-ever agreed buyout to date.

Beyond this, the global energy sector has seen a spate of deals in recent weeks: French firm 21 Centrale Partners agreed to purchase European oil and gas firm Sud Robinetterie for an undisclosed amount; the renewable energy team of UK firm Hg Capital invested €50 million in German biogas project Aufwind Schmak; and a consortium led by US-based Riverstone Holdings agreed to buy Dresser, a Texas producer of infrastructure products for the energy sector.

Last year, deals in the sector topped $50 billion – more than the preceding three years’ totals combined – according to data from Dealogic. A large portion of that total came from the sector’s largest-ever completed deal, the Carlyle-led, $22-billion acquisition of Texas-based pipeline operator Kinder Morgan.