The Goldman Sachs Group Inc.
) came up with the decision to divest its North Carolina-based
Cogentrix Energy LLC, the power plant development unit, to Carlyle
Infrastructure Partners, the infrastructure fund of
The Carlyle Group LP
). Financial terms of the deal, which is anticipated to be closed
in the fourth quarter of 2012, remained undisclosed.
CARLYLE GROUP (CG): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
VALE SA (VALE): Free Stock Analysis Report
To read this article on Zacks.com click here.
Under the terms of the deal, Carlyle will receive admittance to
three coal-fired and two solar power plants in Florida, Virginia,
Colorado and California, along with a development pipeline with
over 550 megawatts (MW) of operational capacity. However, Goldman
will hold a minority stake in one of the power plants.
With such an investment, Carlyle aims to acquire significant market
share in the energy business. Carlyle will finance the deal with
the help of infrastructural fund of $1.14 billion.
In 2003, Goldman purchased Cogentrix for $115 million and took over
$2.3 billion in debt. Since then, Cogentrix has acquired 26 coal-
and natural-gas-fired power plants. However, after the acquisition
in the last decade, Goldman vended most of the plants in order to
reap financial benefits from the proceedings of the sale. Moreover,
through the sales, it aims to maximize the value of the remaining
assets and receive commercial benefits.
Other commodity sector investments of Goldman include U.S. metals
warehousing firm Metro International bought in 2010, and earlier in
2012, Goldman paid about $400 million to acquire Colombian coal
mine assets from Brazil-based
With the investment in the energy business, Carlyle strategizes to
expand in a significant segment of the global economy. Working with
the diligent development team of Cogentrix, Carlyle will be able to
enhance its investment capabilities. Moreover, with such
initiatives, development of conventional and renewable power
projects across the U.S. is expected.
Goldman currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we also
maintain a long-term 'Neutral' recommendation on the stock.