Vistra to buy 2.6GW generation capacity from Lotus for $1.9bn

Integrated retail electricity and power generation company Vistra has agreed with Lotus Infrastructure Partners to acquire its portfolio of natural gas generation facilities, with a combined capacity of 2.6GW, for $1.9bn.

The move enhances the geographical diversification of Vistra’s natural gas fleet.

The acquisition includes five combined-cycle gas turbine facilities and two combustion turbine facilities strategically located across the Pennsylvania-New Jersey-Maryland region, New England, New York and California.

Vistra president and CEO Jim Burke stated: “We believe natural gas-fired generation will continue to play an ever-increasing role in the reliability, affordability and flexibility of US power grids for years to come. The addition of this attractive portfolio of combined cycle and peaking assets allows Vistra to serve growing power demand while exceeding our mid-teens levered return target.”

The funding strategy for the acquisition involves assuming an existing term loan from Lotus and utilising cash on hand.

The term loan is projected to cover 50% of the closing consideration.

The purchase price of the assets suggests a multiple of around seven times the projected 2026 adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation), not accounting for any potential synergies.

The completion of the transaction is set for late 2025 or early 2026 and is contingent upon regulatory approvals from the Federal Energy Regulatory Commission and the Department of Justice, in compliance with the Hart-Scott-Rodino Act.

Lotus Infrastructure Partners chairman and CEO Himanshu Saxena stated: “We are pleased to have reached an agreement to sell this gas plant portfolio to a proven operator like Vistra.

“The Lotus team has acquired, developed and operated this portfolio of high-quality assets for many years, which has helped us deliver this win-win transaction for our investors.”

Barclays and Moelis & Company are acting as financial advisors, while Latham & Watkins and Cleary Gottlieb Steen & Hamilton are providing legal counsel to Vistra.

Lazard is the exclusive financial advisor to Lotus Infrastructure Partners, with King & Spalding and Eversheds Sutherland offering legal advice.

In September 2024, Vistra announced definitive agreements to acquire a 15% equity interest in its subsidiary Vistra Vision from affiliates of Nuveen Asset Management and Avenue Capital Management II.