In attendance: Keith Fullenweider, the Vinson & Elkins LLP corporate partner who represented Kohlberg Kravis Roberts & Co. and TPG on their $45 billion purchase of Dallas power generator TXU Corp. last year, the largest leveraged buyout in history. So, was Jeffrey Hulzschuh, power banker at Morgan Stanley who also advised the investor group on TXU (as well as NRG Energy on its purchase of Texas Genco from KKR and TPG along with Blackstone and Hellman & Friedman two years ago).
Also, there were George Bilicic, Jonathan Mir, Matthieu Bucaille, Bruce Bilger (recently hired from Vinson & Elkins) and Darryl Sagel of Lazard Ltd., which advised TXU and was a conference sponsor (they met with clients in a suite/conference room on the 23rd floor). On the sidelines, dealmakers talked about the minority position the former TXU is trying to sell in its distribution unit, Oncor, which is being shopped by Goldman Sachs Group Inc.
While they agree that TXU wants to sell the stake this year, they differ on whether it will happen: One said it will be difficult to find a buyer with deep enough pockets to make such an investment, and yet another said there's an enormous appetite by infrastructure funds for such assets, not just the very active Macquarie Group Ltd. and Babcock & Brown Ltd. but infrastructure funds being started at investment banks, including Goldman, Sachs & Co., Citigroup Inc., KKR, Blackstone Group LP and J.P. Morgan Chase & Co.
There are other power assets on the block: Word around the conference was that Merrill Lynch & Co. had taken first-round bids for the Ravenswood plant that National Grid plc agreed to sell to receive regulatory blessing for its purchase of Brooklyn, N.Y., utility KeySpan Corp. European utility representations filled the halls of the conference, which wasn't surprising: They've been active acquirers of power assets, most notably renewables like wind farms. But they may venture to buy more utilities and power generators outright a la National Grid/KeySpan.
"European utility companies won't be able to expand much more in Europe," said Bucaille, a Lazard managing director based in Paris. "The key question is: Will European utilities come into the U.S. or will U.S. utilities consolidate?" Lazard managing director Bilicic expects two to four public company utility deals this year, mostly coming from Europe. Said he: "Some European companies could buy the whole country of Macedonia."
- Claire Poole
