Avenue Capital Group (Avenue), a global investment firm, announced that it has completed its sale of a portfolio of energy transition-focused assets in California from its Avenue Golden Continuation Fund, L.P. (Avenue Golden Fund) to Partners Group at a $2.2 billion enterprise value.
The portfolio sold to Partners Group included 11 critical natural gas-fired power plants that Avenue had owned since 2016. In 2022, Avenue launched the $625 million Avenue Golden Fund in order to extend its ownership of the plants and reposition them from a collection of largely merchant thermal assets to a highly contracted energy transition business. This repositioning strategy involved developing on-site battery energy storage systems (BESS) at the existing natural gas-fired power plants to create Hybrid Energy Centers. The BESS, which store energy that can be discharged when needed, helped to reduce the overall carbon footprint of the facilities and created opportunities to enter into long-term contracts.
Craig Hart, Senior Portfolio Manager, Avenue Golden Fund, said: "It has been gratifying to develop a purpose-built energy transition business that delivers reliable, affordable, and lower carbon power to support the ongoing, multi-decade energy transition. We look forward to continuing to optimize our existing and future power investments in the rapidly evolving U.S. power markets."
Marc Lasry, Chairman and CEO of Avenue Capital Group, added, "Craig Hart and his team did a phenomenal job with the Avenue Golden Fund, and we are thrilled with the strong outcome for Avenue's investors. We expect to launch our next energy transition fund in the second half of this year."
The portfolio of assets held by the Avenue Golden Fund has been operated by Middle River Power, which was formed by Avenue in 2016 to operate and manage the firm's investments in the power sector and provide asset management services to third party owners of power plants. Middle River Power was also sold to Partners Group as part of the transaction.
Guggenheim Securities and Morgan Stanley & Co. LLC acted as financial advisors on the transaction for Avenue and Latham & Watkins served as legal counsel.
