CPP Investments Eyes Lowering Stake in Low-Credit Rated Puget Energy

Posted on 03/09/2021

The Canada Pension Plan Investment Board (CPP Investments) is contemplating lowering its ownership stake in utility Puget Energy Inc. CPP Investments hired an adviser to lower its 31.6% stake by around 10%. CPP Investments would like to get around US$ 700 million for the stake, valuing Puget Energy with an enterprise value of up to US$ 7 billion. Puget Energy’s main operating unit is Puget Sound Energy. Puget Sound Energy is the largest electric and gas utility based in Washington. In January 2021, Puget Sound Energy announced plans to reduce its carbon emissions to net zero by 2045.

Puget Sound Energy made US$ 293 million in earnings in 2019, of which they paid out US$ 165 million in dividends to parent company Puget Energy. In turn, Puget Energy paid out US$ 64 million to its shareholders via holding companies.

CPP Investments, British Columbia Investment Management Corporation, Alberta Investment Management Corporation (AIMCo), and Macquarie took Puget private in 2009. Macquarie sold its stake in the Puget to existing and new backers in 2019. In 2019, these investors joined the shareholder roster for Puget Energy – OMERS (24% ownership) and PGGM (10% ownership).

CPPIB was part of a group that took Puget private in 2009, alongside Macquarie Group Ltd., British Columbia Investment Management Corp. and Alberta Investment Management Corp., according to a statement on its website. Macquarie sold its stake in the company to existing and new backers in 2019.

S&P Ratings

In August 2020, S&P Global Ratings removed Puget Energy Inc. and Puget Sound Energy Inc.’s ratings from CreditWatch, after Washington state regulators issued a clarification order that is expected to marginally improve the companies’ financial measures. The ratings outlook is negative. The ratings, including Puget Energy’s BBB- and Puget Sound Energy’s BBB issuer credit ratings, were affirmed.

Puget Energy is wholly owned by Puget Equico LLC, and in turn, wholly owned by Puget Holdings.

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