Energy Capital Partners (ECP) is in advanced discussions to acquire UK-based renewable energy developer Atlantica Sustainable Infrastructure, Bloomberg has reported.

The US private equity firm is finalising the terms of the potential acquisition, with a deal to be announced in spring or early summer 2024.

Atlantica Sustainable Infrastructure’s shares have seen a decline of 18% in US trading between February and May 2024, leading to a market capitalisation of $2.5bn.

Including debt, the company’s valuation stands at $7bn.

Atlantica’s asset portfolio spans the US, Europe, South America and Africa, with energy production from wind, solar and natural gas sources.

In February 2023, Atlantica initiated a strategic review process aimed at enhancing shareholder value. Algonquin Power & Utilities is a significant stakeholder with 42% of the company.

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The outcome of the ongoing discussions remains uncertain, and there is a possibility that an agreement may not be reached, or that Atlantica could opt not to proceed.

ECP, established in 2005 by ex-Goldman Sachs investment banker Doug Kimmelman, manages $30bn in capital commitments.

The company has not commented on the potential deal, and representatives for Atlantica and Algonquin have yet to respond to inquiries from Bloomberg.

The trend of acquisitions within the alternative energy sector has been notable, with listed companies attracting interest following drops in their share prices.

In March 2024, US private equity investor KKR launched a bid to acquire Encavis, a German renewable energy producer, for €2.8bn ($3bn).

In the same month, KKR also agreed to purchase a majority stake in Avantus, a US company focused on utility-scale solar projects.

In April, California’s PG&E also entered discussions with KKR to sell a minority share of its power generation operations as it seeks funding to improve its electricity grid after being implicated in several wildfires.