Blackstone eyes US$2.6 billion of debt to finance power merger
Electricity demand is soaring globally as the data centres needed for Big Tech’s artificial intelligence objectives put pressure on power grids
[NEW YORK] A group of banks led by Barclays is shopping a roughly US$2.6 billion debt deal to support Blackstone’s effort to combine two of its power grid equipment suppliers, according to sources with knowledge of the matter.
The financing is expected to include about US$2 billion of first-lien debt and a US$560 million second-lien loan, said the sources, who asked not to be identified discussing private information. The deal may launch in the leveraged loan market this month, they said.
Proceeds from the deal will be used to support the recapitalisation of MacLean Power Systems (MPS), which Blackstone agreed to acquire in December from Centerbridge Partners. Blackstone is merging MPS, which manufactures parts for the electrical grid, with Power Grid Components (PGC), a supplier it acquired in 2023.
Representatives for Barclays and Blackstone declined to comment. MPS and PGC did not immediately respond to requests for comment.
Lenders are looking to test investor appetite for credit risk, with a number of acquisition-linked financings expected to hit the debt markets in the coming weeks. Banks underwrote about US$65 billion of loans to fund mergers and acquisitions late last year and are working to offload this debt to investors in the capital markets.
Blackstone acquired MPS from Centerbridge through its energy transition fund and its flagship private equity strategy, according to a statement last month.
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Electricity demand is soaring globally as the data centres needed for Big Tech’s artificial intelligence objectives put pressure on power grids, on top of the broader electrification of the economy. That trend has driven investor interest towards the power sector, with benefits for utilities as well as makers of grid equipment.
Founded in 1986, MPS engineers parts for electrical transmission and communications infrastructure, while PGC’s portfolio includes businesses that provide critical equipment such as transformers, which regulate voltage so that electricity can be safely moved across the network and delivered to homes and businesses. BLOOMBERG
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