CenterPoint to Sell LDCs in Louisiana, Mississippi for $1.2B

CenterPoint Energy, Inc. is selling its Louisiana and Mississippi natural gas local distribution company (LDC) businesses to Bernhard Capital Partners for $1.2 billion.

The assets include approximately 12,000 miles of main pipeline in Louisiana and Mississippi serving approximately 380,000 metered customers. The transaction is expected to close toward the end of the first quarter of 2025, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance and state regulatory approvals.

CenterPoint’s LDCs are the second largest natural gas LDCs in both Louisiana and Mississippi by customer accounts, with a combined workforce of approximately 550 employees, according to the release.

“I would like to thank our Louisiana and Mississippi LDC employees, as well as the team members who support these businesses, for their focus on safety, performance, and results. Together, they are our customers’ trusted energy partner in these regions”, CenterPoint President and CEO Jason Wells said.

“The transaction will allow us to optimize 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”, Wells continued.

The sale will also enable us to redeploy approximately $1 billion of future capital expenditures intended for Louisiana and Mississippi into jurisdictions with less regulatory lag thereby enhancing the ongoing earnings power of the company”, he said.

The sales price of $1.2 billion represents approximately 32 multiple of 2023 Louisiana and Mississippi LDC earnings, according to the release. CenterPoint’s Louisiana and Mississippi LDCs represent less than 4 percent of the company’s overall rate base.

“Our Natural Gas Business is core to our company and together with our Electric Business will continue to be a cornerstone of our long-term growth strategy”, Wells added. “From an operational and strategic perspective, we remain confident in and committed to our regulated natural gas utilities in Texas, Indiana, Minnesota, and Ohio where we have significant footprints and rate bases”.

Wells concluded, “This will mark the fourth time over the past few years in which we have recycled sales proceeds and reinvested them in our regulated businesses for the benefit of all stakeholders. The transaction, along with the reinvested capital, will not change our targeted non-GAAP EPS growth rate of eight percent in 2024, and the mid-to-high end of [six to eight percent] annually from 2025 through 2030. The efficiency of this transaction and portfolio optimization will further enhance our ability to continue executing our industry-leading long-term growth strategy for years to come”.

CenterPoint describes itself as the only investor-owned electric and gas utility based in Texas. It is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas.

As of September 30, 2023, the company said it owned approximately $39 billion in assets.

Bernhard Capital Partners is a services and infrastructure-focused private equity management firm established in 2013. Bernhard Capital Partners has deployed capital in four funds across several strategies and has approximately $3.4 billion of gross assets under management.

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