LS Power, Dynegy dissolve joint venture

The energy-focused private equity firm will get $19m and take over various ‘greenfield’ development projects under consideration in the US.

LS Power Associates, the private equity arm of New York hedge fund Luminus Management and US energy company Dynegy have dissolved a joint venture formed in 2006 to invest in energy development projects.

The break-up agreement calls for Dynegy to pay LS Power $19 million. Also, LS Power will take over the various “greenfield” projects the joint venture had under consideration in Arkansas, Georgia, Iowa, Michigan and Nevada.

“The development landscape has changed significantly since we agreed to enter into the development joint venture with LS Power in the fall of 2006,” Bruce Williamson, chairman, president and chief executive of Dynegy, said in a statement. “The development of new generation is increasingly marked by barriers to entry including external credit and regulatory factors that make development much more uncertain.”

In October, LS Power and Global Infrastructure Partners withdrew a $7.8 billion bid to take over Calgary-based power generator TransAlta, which had rejected the proposal in August as too low.

LS Power, founded in 1990, closed its second, energy-focused private equity fund in 2007 on $3.1 billion. Its debut fund closed in 2005 on $1.2 billion.