GIP and CPP close to finalizing $5 billion deal with utility group Allete

Global Infrastructure Partners (GIP) and Canada’s largest pension fund are on the verge of acquiring Allete, a regulated utility with significant clean energy operations, for approximately $5 billion. This deal is expected to further solidify Allete’s position in the utilities sector, particularly in the production of wind energy.

Allete, based in Duluth, Minnesota, is renowned for powering mines that produce iron ore for the steel industry. In addition to its traditional utility operations, Allete also boasts a substantial renewable energy portfolio that is set to generate over 1.5 gigawatts of wind energy.

GIP, a major player in the infrastructure investment space with over $100 billion in assets under management, is teaming up with CPP Investments, a Canadian pension fund with $590 billion in assets. This partnership underscores the growing interest in utilities and renewable energy sources among institutional investors.

The move comes at a time when infrastructure groups are increasingly focusing on utilities to capitalize on the growing demand for clean energy and the transition to lower-carbon energy production. Allete’s plans to invest $4.3 billion in expanding its renewable power sources align with broader industry trends towards sustainability and carbon-free power generation.

Despite some initial hesitations from potential buyers due to the regulated nature of the utility sector and the concentrated customer base of Allete, the deal signifies a significant milestone in the ongoing evolution of the energy industry. With the global shift towards cleaner energy sources, investments in renewable energy infrastructure are becoming increasingly attractive to investors looking to capitalize on the transition to a more sustainable future.