Can PE Firms Own Utilities and Data Centers? Behind Blackstone’s $11.5B TXNM Take-Private
Plus: We outline portco M&A and exits from last week.
Captive customers.
Blackstone Infrastructure has agreed to acquire TXNM Energy, a regulated utility located in New Mexico and Texas, for $11.5 billion, or $61.25 per share. The deal represents a 15 percent premium over the stock’s last closing price and is expected to close in the second half of 2026.
This isn’t Blackstone’s first investment in a regulated utility. The firm bought minority stakes in FirstEnergy and NIPSCO in 2021 and 2024, respectively. However, this is the first instance where Blackstone has bought a regulated utility outright and taken it private.
Blackstone declined to comment for this piece, so it is unclear if the value creation tactics utilized at FirstEnergy and NIPCO will be mirrored with TXNM. However, a source with knowledge of the deal claimed that the firm’s capital will be utilized to realize TXNM’s pre-determined goals, such as a $546 million resiliency plan to be implemented by 2027.
“Think about the nature of this infrastructure platform. It's a perpetual capital fund vehicle, meaning that, unlike some of the other investors that have to sell in five, seven, or 10 years, this fund is looking to find industry-leading companies to invest behind for the very long term,” the source said.
Conflicting interests.
Blackstone is no stranger to the energy landscape of the American southwest. The company already owns QTS Realty Trust, a data center operator with locations in TXNM’s domain, including a 70MW Fort Worth campus and a 147MW facility located in the Dallas area, with plans to expand.
Some consumer advocates see this as a conflict of interest. If Blackstone owns both the region’s main supplier of energy alongside a massive customer, it results in preferential pricing for QTS facilities, with ratepayers paying the difference. There are also questions as to whether or not QTS facilities would be prioritized when it comes to grid upgrades and planning.
"I will 100 percent be involved at FERC on this,” said Tyson Slocum, the director of the energy program at Public Citizen, a consumer rights advocacy group. “We'll be making noise about this. I am positive that folks in New Mexico will be too.”
It’s not the first time Public Citizen has taken Blackstone to bat over perceived conflicts of interest stemming from the firm’s data center holdings. Since February, the watchdog has filed two challenges with FERC against Blackstone’s bid to buy Potomac Energy Center, a natural gas-fired power plant located in Virginia, a data center hot spot where Blackstone owns numerous facilities.
“Just like Enron intentionally disrupted the market to create a crisis back in 2000 and 2001, if you control a massive power plant that you just spent a billion dollars on, and you control a couple thousand megawatts of data centers in the same market, you can do all sorts of coordinated shenanigans to create disruption in the energy market, either on the supply or demand side, or both, to engineer market price fluctuations,” Slocum explained.
In theory, after regulatory bodies approve of Blackstone’s acquisition, they retain the right to audit TXNM’s financial statements to ensure that there is no preferential treatment for QTS facilities.
"When you take a public utility private, you absolutely lose a ton of financial transparency into the holding company's operations, and that should be of concern,” Slocum pushed back. “Part of the strategy is you take the company private. And all of a sudden, a bunch of the financial operations at the holding company level become obscured to state regulators. Conceivably, state regulators can try to request information, but it becomes a process and a process that many state regulators don't have the time or resources to pursue.”
Sector-wide.
While Blackstone may be the poster child for this perceived conflict of interest, it's not the only private equity firm caught up in it:
Brookfield owns Pipeline Infrastructure Ltd., a natural gas transportation and distribution utility in India, where it also has a joint venture with Digital Realty to build out data center developments.
GIP, alongside CPP Investments, has placed a $5 billion bid to own Allete, a Minnesota-based regulated utility. GIP also co-owns (with KKR) CyrusOne, a global data center operator with facilities in Minneapolis, Minnesota (and plans to build a 343-acre data center park outside the city in the near future).
Five Point Energy announced last week its intentions to buy PowerBridge, a data center operator in the Permian Basin. Five Point already owns WaterBridge, a water infrastructure company, and Northwind Midstream, a natural gas utility, in the same area.
This list doesn’t include private equity companies that own utility-scale generation facilities alongside data center companies, of which there are many.
PE portcos also saw some full and partial exits last week, as well as some exits-to-be:
Partners Group IPO'ed Green Tea Group, a Chinese fast-casual dining chain, on the Hong Kong Stock Exchange. The offering included 168,364,000 shares at HK$7.19 each ($0.92), raising approximately HK$1.21 billion. Despite the IPO being oversubscribed 317 times, the stock opened at its offer price and declined by 12.5 percent on the first trading day, closing at HK$6.29.
Lotus Infrastructure sold seven natural gas generation facilities totaling 2.6GW to Vistra for $1.9 billion.
Montagu sold a minority stake in Wireless Logic to General Atlantic, valuing the British IoT connectivity provider at £3.5 billion ($4.7 billion).
Verdane, PSG, and TA Associates exited their investments in Hornetsecurity through a sale to Proofpoint, a cybersecurity firm owned by Thoma Bravo. The transaction valued Hornetsecurity at $1.8 billion.
Triton sold FläktGroup, a global HVAC solutions provider, to Samsung Electronics for €1.5 billion ($1.6 billion).
Apollo agreed to acquire PowerGrid Services from The Sterling Group. Financial terms were not disclosed.
LS Power announced a $12 billion deal to sell 18 natural gas-fired facilities totaling 13 GW and a virtual power plant platform to NRG. The transaction includes $6.4 billion in cash, $2.8 billion in stock, and the assumption of $3.2 billion in net debt and is expected to close in Q1 2026.
Meanwhile, portco M&A was in full swing:
Apollo-owned Evri, formerly Hermes UK, merged with DHL eCommerce UK to form a major UK parcel delivery operator. Financial terms were not disclosed.
Westland Insurance, backed by Ontario Teachers' Pension Plan, acquired Sagium Health Strategies Inc. through its newly launched benefits division, Westland Benefits. Financial terms were not disclosed.
And there were some key people moves:
Astorg announced a leadership overhaul. Co-founder and CEO Thierry Timsit was appointed executive chairman, with Benjamin Cordonnier, previously partner and head of portfolio performance, replacing him as chief executive. Cordonnier and Judith Charpentier, partner and co-head of flagship and head of healthcare, will jointly serve as co-managing partners, overseeing the firm's daily operations. Additionally, Thibault Veber was appointed COO, succeeding Guillaume de Malliard.
Advent International appointed Stephan Scholl as an operating partner. Scholl most recently served as CEO of IT service manager Alight Solutions and president of enterprise software company Infor.
See you next week!