Utilities

Beware Brazilian promises to relinquish control

23 Aug 2017

The cash-and-corruption-challenged government dangled the idea of reducing its 51 pct voting stake in Eletrobras, the electric utility. While that sent the shares soaring by half, investors need only recall Brasilia's past stewardship at Petrobras and Vale to slow their samba.

Elliott is grasping at straws in Oncor battle

17 Aug 2017

The hedge fund says it has enough debt in the bankrupt utility to block Warren Buffett’s $18 bln offer. Yet the move makes little sense in the absence of a firm alternative. The judge is likely to see through Elliott’s posturing, as is the Omaha sage, who refused to up his bid.

Elliott’s Oncor delay mainly helps Elliott

28 Jul 2017

The hedge fund won more time to find $9 bln to take the Texas utility’s parent out of bankruptcy. Its plan values Oncor more highly than Berkshire Hathaway’s agreed offer. But it looks as if Paul Singer’s fund would get most of the benefit. That makes Elliott’s deal a tough sell.

Elliott tests one of Warren Buffett’s golden rules

11 Jul 2017

Paul Singer's hedge fund has cobbled a rival bankruptcy-exit plan for Energy Future, challenging Berkshire Hathaway's $9 bln deal. The new offer may be a stretch, but Buffett famously eschews competitive processes. He also needs approval from creditors, one of which is Elliott.

Rare sense prevails in reworked U.S. utility deal

10 Jul 2017

Great Plains tried to buy next-door power provider Westar, but regulators nixed the plan. In a new roughly equal $14 bln merger, the target gets a lower headline price and the buyer less control. It's an unusually pragmatic compromise considering how often egos undermine M&A.

Buffett may have to turn on charm for Oncor encore

7 Jul 2017

Berkshire Hathaway is taking a second stab at Texas utility Energy Future, six years after a $2 bln investment led to big losses. Two other suitors failed to agree with regulators. Buffett's structure sounds smarter, but sealing the $18 bln deal could yet require some sweet talk.

Natural gas inflicts fresh wounds on old victim

22 Jun 2017

Southern risks a new writedown after regulators tired of waiting for a novel “clean-coal” plant. As with its troubled nuclear project, the $50 bln U.S. utility tried untested designs. Efforts to diversify fuel sources are admirable but cheap gas prices continue to crush them.

Water investors will get used to cash calls

19 May 2017

Shares in Sao Paulo utility Sabesp plunged on news it may raise equity for post-drought projects. But its funding needs and already high leverage were no secret. With the global water sector requiring $10 trln of investment, this Brazilian capital raise won’t be the last.

Chinese taxpayers have most to fear on Silk Road

16 May 2017

President Xi pledged $124 bln at an international summit to build a modern version of the ancient trading route. Huge global infrastructure spending will burnish Beijing's standing. But the hype could backfire if citizens of the People's Republic fail to reap tangible benefits.

Texas regulators once bitten, twice shy with TXU

12 May 2017

NextEra wants another shot at Oncor after local officials blocked its $18 bln deal to buy the transmission group caught in a 2007 LBO that went under. The Lone Star state reasonably wants Oncor protected, but creditors including Elliott are antsy, and a deal is better than limbo.

Jewel magnates’ Alinta buy is a gift to TPG

16 Mar 2017

The billionaire Cheng clan is snapping up Australia's Alinta Energy from the U.S. buyout firm and others. With a mooted $3 bln price, the surprise deal handily beats a likely IPO valuation. Hong Kong's richest families apparently can't get enough of stable Aussie businesses.

UK, even now, is a good bet for Li Ka-shing

23 Sep 2016

The Hong Kong tycoon is reportedly eyeing $14 bln of gas grids. Never mind Brexit uncertainties or the veto of Li's British mobile merger. UK infrastructure offers solid, stable returns, and this could be a good use of the $7 bln cash pile stranded at Li's Power Assets unit.

China backlash bandwagon rolls over Li Ka-shing

11 Aug 2016

Australia may block an $8 bln power grid sell-off on security grounds, since both bidders had ties to China. But the Hong Kong tycoon is very different from Beijing-owned State Grid. After recent snubs in Britain and Canada, the climate for Chinese investment is souring rapidly.

Hawaiian deal wipes out on isolationist wave

18 Jul 2016

Aloha State regulators blocked NextEra's $4.3 bln acquisition of Hawaiian Electric. A sale to the Florida operator was a neat way to end the utility's odd ownership of a bank and spur investment in solar. Britain isn't the only isle whose protectionist tendencies will be painful.

French foray into Italian mobile will be hard slog

6 Jul 2016

France’s Iliad will create a fourth mobile operator in Italy as part of Hutchison’s plan to merge its 3 Italia with Vimpelcom’s Wind. Iliad disrupted the French market when it burst on the scene in 2012 but Italian prices are already low. It may struggle to make the same splash.

U.S. $12 bln utility coupling lacks spark

31 May 2016

Great Plains Energy’s deal for larger neighbor Westar has the modest premium and coy savings target typical in deals between regulated firms. Even if synergies come in higher than hinted, customers may get any surplus. Investors may be right to worry that the buyer is overpaying.

RWE and DONG at opposite ends of green power shift

12 May 2016

The soon-to-IPO Danish utility DONG embraced renewable energy early. The result is strong growth and healthy returns. Late movers like German RWE are suffering badly. Its shares have more than halved in three years. Capital is leaving the old and dirty, and going into the new.

Financial prospects flicker on $11 bln power deal

9 Feb 2016

Canadian utility Fortis would need some $230 million a year in cost savings or other gains to justify the $1.7 bln premium it’s paying for U.S.-based ITC. The strategic sense in the acquisition doesn’t include obvious synergies. That makes a return for Fortis investors look dim.

Warren Buffett’s solar eclipse will be fleeting

11 Jan 2016

A Berkshire Hathaway utility won a battle over Nevada rates for solar-panel users, prompting Sunrun and Elon Musk-backed SolarCity to pack up. The state’s relatively small 3 pct share of the U.S. market, along with broader industry momentum, means sun power should keep shining.

Playground weaklings give Li Ka-shing bloody nose

25 Nov 2015

Hong Kong shareholders rejected the tycoon’s $12.4 bln bid to merge his listed energy and infrastructure units. It’s another sign institutions in the Chinese territory are increasingly willing to exercise their limited powers. Companies can no longer take support for granted.