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Star Tribune : World’s largest asset manager behind Duluth energy company Allete’s $6.2B sale

May 31, 2024

Consumer advocates are expressing concerns about the sale of Duluth energy company Allete to Global Infrastructure Partners (GIP) and the Canada Pension Plan (CPP) investment board for $6.2 billion. GIP, set to be acquired by BlackRock for $12.5 billion later this year, will become the controlling owner, with CPP holding a minority stake. The Minnesota Public Utilities Commission (PUC) will decide on the sale, which would take Allete private.

Star Tribune May 17, 2024: World’s largest asset manager behind Duluth energy company Allete’s $6.2B sale

The deal has raised eyebrows due to BlackRock’s potential to stifle competition in the energy market, given its massive asset base of around $10 trillion. BlackRock’s typical role as a passive investor contrasts with the active control it would gain over Allete, prompting calls for regulatory scrutiny. Tyson Slocum from Public Citizen and the Private Equity Stakeholder Project have voiced concerns, filing a letter with the Federal Energy Regulatory Commission (FERC) suggesting that BlackRock’s involvement could hinder competition and affect rates and regulation. You can find the full protest document here:

GIP, managing $112 billion, and CPP, with a $590 billion portfolio, both hold significant energy and infrastructure investments. However, the unprecedented nature of this acquisition in Minnesota’s energy sector and BlackRock’s significant existing holdings in other Minnesota utilities add to the complexity and scrutiny of the deal.

Earlier this year, the Private Equity Stakeholder Project joined with community members from South Texas to demand an end to GIP’s dangerous, proposed liquid natural gas project, Rio Grande LNG, at GIP headquarters in New York City. PESP has made the case that GIP’s LNG project in South Texas poses multiple risks to investors with capital exposed to the terminal.

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