Macquarie Said to Explore Sale of $2 Billion Stake in Puget

(Bloomberg) -- Macquarie Group Ltd. is preparing to sell its stake in Puget Energy Inc., the biggest utility in Washington state, people familiar with the matter said.

The Australian lender’s infrastructure arm is in the early stages of studying a sale of its 42 percent interest in Puget Energy’s parent company, Puget Holdings LLC, according to the people. The stake could fetch about $2 billion, the people said, asking not to be identified discussing private information.

Macquarie Infrastructure Partners is selling assets held by funds raised in 2006 and 2008, which are now paying out to investors after about 10 years. The firm agreed to sell New England water utility Aquarion Water Co. to Eversource Energy this month, and last year offloaded its interest in power company Duquesne Light Holdings.

A group of investors led by Macquarie Infrastructure took Puget Energy private in 2009 in a deal valued at about $3.4 billion. The consortium, which included Canada Pension Plan Investment Board and British Columbia Investment Management Corp., set up an entity called Puget Holdings to buy all of the utility’s publicly traded shares. 

Macquarie Infrastructure holds the biggest stake in Puget Holdings, though it is not considered a controlling investor, according to company filings. The other stakeholders are Alberta Investment Management Corp. and First State Super Infrastructure Trust, an Australian pension fund that was a Macquarie affiliate when the group bought Puget. 

Puget Holdings’s other investors have no plans to sell their stakes and may exercise their right of first refusal to buy Macquarie’s position, the people said. 

‘Dry Powder’

Representatives for Alberta Investment, BCIMC, Macquarie and Puget declined to comment. A representative for Canada Pension didn’t immediately respond to requests for comment. First State didn’t respond to requests for comment outside of regular business hours.

Nicholas Moore, Macquarie Group’s chief executive officer, said in a May interview that the infrastructure division has A$10 billion ($7.6) worth of “dry powder” and a shopping list of potential investments. That same month, Macquarie led an investor group that agreed to buy a majority stake in Australian electricity distributor Endeavour Energy for A$2.9 billion.

Macquarie’s infrastructure arm has A$152.4 billion invested in 135 portfolio companies, according to a company statement last month. Typical assets held include airports, toll roads and pipelines.

Puget Energy’s main operating unit, Puget Sound Energy, is the largest electric and gas utility based in Washington with close to 2 million residential, commercial and industrial customers, according to its annual report. Net income at Puget Energy fell about 9 percent to $128 million in the three months ended March 31, compared to the same period a year earlier, primarily due to higher operating expenses. Operating revenue was up about 12 percent on higher electricity and natural gas sales.

--With assistance from Emily Cadman

To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net, Brett Foley in Melbourne at bfoley8@bloomberg.net.

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Elizabeth Fournier at efournier5@bloomberg.net, Timothy Sifert