Following the completion of the deal, the natural gas distribution systems will be operated by Delta Utilities with an enlarged operational presence that will encompass multiple communities across Louisiana and Mississippi
Bernhard Capital-backed Delta Utilities to acquire CenterPoint's Louisiana and Mississippi natural gas distribution assets. (Credit: gokul raghu m from Pixabay)
American electric and gas utility CenterPoint Energy has agreed to divest its Louisiana and Mississippi natural gas distribution operations to Delta Utilities, a portfolio company of Bernhard Capital Partners, for $1.2bn.
The assets include about 19,312km of main pipeline in Louisiana and Mississippi that caters to nearly 380,000 residential and commercial metered customers.
Following the completion of the deal, the natural gas distribution systems will be operated by Delta Utilities with an enlarged operational presence that will encompass multiple communities throughout Louisiana and Mississippi.
CenterPoint Energy said that the deal valuation represents approximately 32 times the 2023 earnings of the Louisiana and Mississippi local distributions (LDCs).
CenterPoint Energy CEO and president Jason Wells said: “The transaction will allow us to optimise our portfolio of utility operations and efficiently recycle approximately $1 billion in after-tax cash proceeds into our service territory where we have both electric and natural gas operations or where we have a larger presence at a valuation that is more efficient than issuing common equity.”
CenterPoint Energy’s LDCs are said to be the second largest natural gas LDCs in both Louisiana and Mississippi in terms of customer accounts. They have a combined workforce of around 550 employees.
According to Bernhard Capital Partners, integrating these systems into Delta Utilities’ current operational strategies will enhance overall scale and capacity, thereby benefiting all operations.
Bernhard Capital Partners founder and partner Jeff Jenkins said: “This transaction will bring together deep expertise and leadership with many years of experience in utility operations and the invaluable institutional knowledge of those who have operated these systems for decades to benefit customers.”
Subject to customary conditions, including Hart-Scott-Rodino antitrust clearance and state regulatory approvals, the deal is expected to be close by the end of Q1 2025.
Morgan Stanley and Wells Fargo Securities were CenterPoint Energy’s financial advisers while Latham and Watkins, Phelps Dunbar, and Brunini, Grantham, Grower & Hewes acted as its legal advisors.
For Bernhard Capital Partners, Jefferies is the financial adviser along with Scotiabank while Kirkland & Ellis is the legal adviser.