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The Federal Energy Regulatory Commission on Friday rejected a planned $1.1 billion merger between Bridgepoint Group and Energy Capital Partners, or ECP, because they failed to show the transaction wouldn’t harm competition. ECP says it’s one of the largest private owners of power assets in North America.
Bridgepoint on Monday said ECP plans to re-file the application at FERC in “the coming days” providing additional information addressing the points raised in the commission’s decision. Bridgepoint expects the deal to close in the second quarter this year.
FERC’s decision hinged on an affiliate of Blue Owl Capital owning a roughly 15% stake in Bridgepoint, a private equity asset manager based in London. Blue Owl is an asset management company headquartered in New York.
Under FERC’s regulations, ownership of more than 10% of voting shares creates an affiliate relationship between Blue Owl and Bridgepoint, requiring ECP, based in Summit, New Jersey, to tell FERC what Blue Owl owns so the commission can assess how the planned deal would affect competition, according to the decision.
However, FERC said ECP didn’t provide that information, instead arguing that certain voting restrictions removed any potential affiliation. “We disagree,” FERC said.
“Bridgepoint and [ECPs’] attempts to create a $61 billion private equity tie-up failed at FERC after the energy regulator raised questions about the merger's impact on competition,” Tyson Slocum, director of Public Citizen’s energy program, said in an email.
As part of FERC’s review of the planned transaction, Public Citizen, a consumer advocacy group, told the agency ECP failed to disclose that Blue Owl owns shares in Bridgepoint and ECP. Public Citizen frequently presses FERC to seek more disclosure from companies seeking the agency’s approval for mergers and acquisitions.
Bridgepoint on Monday said it is working with Blue Owl in response to FERC’s order and any arrangements entered into with Blue Owl won’t affect the underlying terms of the transaction.
ECP has indirect ownership interests in Heartland Generation, Calpine, TerraGen Power Holdings II, Convergent Energy and Power, and Pivot Energy, according to the application. It is also affiliated with several power marketers and entities that own or control U.S. power plants.
ECP owned about 23,900 MW, nearly all gas-fired generation, the most among private equity firms, as of September 2021, according to a report from Americans for Financial Reform Education Fund.