Centerbridge’s Silver outlines plans for MacLean Power Systems; Cameco and Brookfield to pick up Westinghouse

Cameco Corp and Brookfield Renewable Partners agree to acquire Westinghouse Electric Company for $7.9 billion.

Good morning Hubsters, it’s Craig McGlashan here, filling in for MK Flynn on the Wire.

There are few topics hotter than energy right now – whether it’s soaring costs in the wake of Russia’s invasion of Ukraine or the need to switch away from fossil fuels in the face of climate change. But one long-standing problem that tends to garner fewer headlines is the health of energy infrastructure itself.

Need for redundancy. Some in private equity are paying attention to this problem, however. PE Hub’s Obey Martin Manayiti spoke to Centerbridge Partners’ senior managing director Steven Silver about his firm’s purchase earlier in October of a majority stake in MacLean Power Systems, a Fort Mill, South Carolina-based maker of poleline hardware, insulators, arrestors, connectors and other engineered products used in electrical power infrastructure.

There are lots of angles to Obey’s interview – you can read the full piece here – but I was particularly interested to read how the rapid development of renewable energy from sources such as solar and wind has created a need to upgrade the grid, which was mainly targeting traditional energy, to handle both sources. Renewable energy sources do not produce energy all the time and they need redundant power infrastructure, Silver said.

“The increased penetration of wind and solar generation is going to require a significant investment in transmission and distribution infrastructure because these power sources are generally in more diffuse locations and require redundant power structures to be built around them because they do not continually produce energy,” Silver said.
The same goes with electric vehicle charging systems that were not part of the old infrastructure. The US is rolling out electric vehicles at a rapid pace, and investors are scooping up opportunities that are supporting the charging systems across the country.

Going nuclear. Sticking with the energy theme, Cameco Corp and Brookfield Renewable Partners have agreed to acquire Westinghouse Electric Company, a Canonsburg, Pennsylvania-based nuclear services provider. The total enterprise value for Westinghouse is $7.9 billion.

Brookfield Renewable will own a 51 percent stake in Westinghouse, while Cameco will own the remaining 49 percent stake. This equity cost will be shared proportionately between Brookfield and its institutional partners (about $2.3 billion) and Cameco (about $2.2 billion).

The acquisition, expected to close in the second half of 2023, will provide opportunities to generate value and grow the business globally, Brookfield Renewable and Cameco said.

The seller is the private equity group of Brookfield Asset Management, also known as Brookfield Business Partners, which acquired Westinghouse in 2018.

You can read more on the deal here.

Taking off. A report from tech analyst firm CCS Insight this week suggested that Elon Musk might spin-off Starlink from SpaceX via an IPO by 2025.

Starlink delivers broadband internet to users via satellite and is part of Musk’s space exploration company.

If you want to keep up with everything that’s been happening in the space sector (I was tempted to say the ‘space space’ but the subeditors would hate me) then check out Obey’s roundup piece: 6 PE-backed deals that shoot for the stars, gearing up for space tourism.

Securing the deal. Cybersecurity has been a huge area of interest for private equity of late – check out MK’s coverage on Tech Tuesday this week.

But there was more to come as Option3 sold Dark Cubed, a provider of automated network security solutions serving small and medium-sized businesses, to Celerium. No financial terms were disclosed.

Option3 is a cybersecurity-focused private equity firm.

Celerium is a provider of active cyber defense solutions.

“Nearly half of cyber-attacks target SMBs and yet this part of the market, with its budget and manpower limitations, is the first to be overlooked” said Manish Thakur, a managing partner at Option3, in a statement. “We looked hard for security solutions that were specifically designed for this universe, understanding its budget constraints, limited internal cyber talent and no experience in integrating complex solutions to protect their sensitive data.”

Check out the full coverage of the deal here.

Final whistle. Before I leave you, I’m going to be cheeky and plug a bit of our recent coverage over at PE Hub Europe.

I’m also going to try to get through this shoutout without forgetting my audience and referring to ‘football’ rather than ‘soccer’…

We’ve seen a huge amount of US private equity interest in European soccer teams and leagues and while much of this has been focused on some of the larger clubs, one earlier deal was for Burnley Football Club. While it was playing in the top tier of English soccer when in December 2020, Velocity Sports Partners, the sports investment arm of New York-based private equity firm ALK Capital, paid a reported £200 million ($225 million; €230 million) for an 84 percent share in the club, it has since been relegated into the second tier.

PE Hub Europe caught up with Alan Pace, managing partner at ALK Capital and chairman of Burnley FC, to find out why private equity has become so interested in European soccer, what made Burnley itself attractive and how the company is coping with relegation – a concept alien to American sports.

You can see the whole interview here – just register to read for free – but here’s a couple of choice pieces:

How does Burnley’s relegation to the Championship affect the growth outlook and plans for the club?
Obviously, the relegation did affect plans because you lose the Premier League cashflow. However our idea has always been to build a sustainable club whether that is in the Premier League or not. We had an incredibly busy summer in the transfer market and, of course, appointed a new manager in former Premier League winner, Vincent Kompany, but we were very happy with the business and the reset for the playing squad and management.

What expertise do you believe you and other PE firms can bring to European soccer that has been lacking in it so far?
I would suggest that we and others with background in this area can bring a level of experience and management that is focused on succeeding while committed to sustainability and profitability. However, it is important for us to be clear that while those of us in ALK Capital have a background in private equity, this is not a private equity fund. We have purchased Burnley FC with a long-term view and our intention is for this to be different than what might be delivered through a traditional fund. Ultimately, we have a long-term plan that we are working to as owners of the football club.

Please don’t write in about that last use of the word ‘football’ – it was Pace’s word, not mine.

That’s it from me. Aaron Weitzman will be with you tomorrow for the final Wire of the week.

Cheers,

Craig