Emera Inc. strikes huge $1.25bn deal: New Mexico Gas Company to be sold to Bernhard Capital Partners

Emera Inc., a globally recognised energy and services company headquartered in Halifax, Nova Scotia, has announced a significant deal involving the sale of its subsidiary, New Mexico Gas Company, Inc., to Bernhard Capital Partners for a total of $1.25 billion USD. This substantial transaction includes the assumption of approximately $500 million USD in debt and is designed to enhance Emera’s financial health and capital allocation strategy.

Strengthening Emera’s balance sheet and capital strategy

Scott Balfour, President and CEO of Emera Inc., emphasised that this sale aligns with the company’s strategic objectives of focusing on electrification, decarbonisation, and improving resilience against climate-related challenges. The transaction enables Emera to optimise its portfolio by reallocating capital to high-growth markets, thus strengthening its balance sheet and reducing holding company leverage by 200 basis points. Balfour noted that New Mexico Gas Company, which Emera acquired in 2016 as part of its purchase of the TECO group, has grown to become the largest natural gas utility in New Mexico, serving over 545,000 customers and managing more than 12,000 miles of pipelines.

Bernhard Capital Partners’ investment and local economic impact

Jeff Jenkins, Founder and Partner at Bernhard Capital Partners, expressed enthusiasm about the acquisition, underlining the firm’s plans to create around 70 new local jobs and invest in essential infrastructure assets. Bernhard Capital Partners, known for its extensive U.S. operations, has recently acquired several natural gas distribution companies in the Gulf South. Jenkins highlighted that the firm values New Mexico Gas Company’s strong history and is committed to retaining its leadership team and employees post-acquisition. The investment also aligns with Bernhard Capital’s strategy to bolster infrastructure assets critical to community resilience and economic growth.

Transaction details and regulatory considerations

The transaction, which represents approximately 23 times the last 12 months’ earnings and 1.42 times the rate base, is set to generate estimated after-tax net proceeds of around $750 million USD. These proceeds will be used to repay holding company debt and support further investments in Emera’s regulated utility businesses. The deal remains subject to regulatory approval from the New Mexico Public Regulation Commission and the Hart-Scott-Rodino Antitrust Improvements Act, with an expected closing date in late 2025, contingent on regulatory authorisation.

Advisors and background

J.P. Morgan Securities LLC is serving as the exclusive financial advisor to Emera, with Davis Polk & Wardwell LLP providing legal counsel. For Bernhard Capital Partners, Jefferies LLC is the exclusive financial advisor, with Kirkland & Ellis LLP offering legal advice. Emera, with approximately $39 billion in assets and 2023 revenues of $7.6 billion, focuses on transitioning from high carbon to low carbon energy sources. Bernhard Capital Partners, established in 2013, manages over $4 billion in gross assets and is dedicated to creating sustainable value through its investments in infrastructure and services.

Why is Emera selling New Mexico Gas Company?

Emera is selling New Mexico Gas Company to strengthen its balance sheet, reduce debt, and reallocate capital to higher growth markets focused on electrification and decarbonisation.

Who is buying New Mexico Gas Company and why?

Bernhard Capital Partners is purchasing New Mexico Gas Company to expand its portfolio of critical infrastructure assets and invest in local economic growth.

What will happen to the employees of New Mexico Gas Company after the sale?

The leadership team and employees of New Mexico Gas Company will remain in place post-acquisition, with plans to create approximately 70 new local jobs.