Arcapita Bank B.S.C.(c), a leading international investment firm headquartered in Bahrain, today announced that it and its affiliates have completed the acquisition of the Bosque power generation facility located in Texas, United States, for a total transaction value of $695 million. This is Arcapita’s largest asset-based investment in North America to date, and means that Arcapita has now completed deals with a total transaction value of over $22.5 billion.
Located in Laguna Park, Texas, the Bosque facility commenced operations in 2002 as a natural gas fired power plant, and is currently undergoing conversion to a more efficient combined cycle facility with a capacity of over 800 megawatts. Bosque sells its energy and ancillary services into the Texas power market, where increasing demand is leading to tightening reserve margins.
Commenting on the transaction, Atif Abdulmalik, CEO of Arcapita, said: "During the last quarter, we realized over $1 billion as we exited from two previous asset-based investments, delivering greater than expected returns to investors. With its mix of capital growth and income yield, this remains an important asset class for our investors, and we are pleased with the addition of Bosque into the portfolio. It is an attractive generation asset in a power market experiencing a growing demand for clean, efficient power, and we believe the investment offers our investors access to high quality, risk-adjusted returns."
The Bosque facility will be managed by Fulcrum Power Services L.P., an experienced energy management services company with a strong existing relationship with the Bosque management and detailed knowledge of its operating history.
Asim Zafar, Arcapita's Head of Asset-Based Investment, said, "The Texas power market enjoys strong and growing demand for electricity, and Bosque has an excellent operating history of consistent maintenance and capital improvements. The upgrade to combined cycle technology further improves the supply economics for the facility. In addition, Fulcrum's proven asset management capabilities and expertise in the Texas power market will serve to enhance the cash flows generated by the facility."
The acquisition is Arcapita's largest US asset-based investment and follows recent transactions such as the $369 million acquisition of Varel Holdings, Inc., the world's fastest growing manufacturer of drill bits, and the $4.2 billion acquisition of Viridian Group plc, the Northern Ireland electricity utility.
