Apollo, Capital Power Form $3B Venture for US Natural Gas Assets
The new partnership signals accelerating institutional investment in gas-fired power generation amid rising electricity demand and a robust M&A climate.
Apollo Global Management and Capital Power are launching a new partnership to acquire up to $3 billion in natural gas assets across the United States, signaling a major institutional bet on the fuel's long-term role in the American power grid.
The memorandum of understanding, announced Tuesday during Capital Power's 2025 Investor Day, establishes a joint venture targeting merchant natural gas-fired power generation assets. The collaboration pairs Apollo's vast financial resources with Capital Power's deep operational expertise in the energy sector, creating a formidable new player in the market for thermal power.
According to a company press release, the venture is a key component of Capital Power’s strategy to accelerate its growth in the U.S. market. The partnership is designed to enhance the company's access to capital and leverage its capabilities in asset optimization and power generation.
This multi-billion-dollar commitment arrives at a pivotal moment for the U.S. natural gas industry. The sector has seen a flurry of consolidation and investment activity in recent months, underpinned by strong fundamentals. In November, Henry Hub futures prices climbed over 14% amid forecasts for a colder winter and record demand for liquefied natural gas (LNG) exports, which are nearing 19 billion cubic feet per day.
The deal also lands in a hot M&A market. It follows Antero Resources' recent $2.8 billion acquisition of Marcellus Shale assets and the massive $12.8 billion merger announced between SM Energy and Civitas Resources. The entrance of a private equity heavyweight like Apollo suggests that sophisticated investors see significant value in a sector critical to grid reliability.
Analysts view the move as a strategic wager on the enduring need for dispatchable power generation to backstop intermittent renewable energy sources like wind and solar. As electricity demand rises, driven by the proliferation of data centers, artificial intelligence, and broad electrification, the role of natural gas in ensuring a stable power supply is becoming increasingly crucial.
In its investor day presentation, Capital Power highlighted its goal of delivering reliable, long-term growth. By focusing on merchant power assets, the venture will be positioned to capitalize on price volatility and supply-demand imbalances in regional electricity markets.
The partnership between a major infrastructure investor and a seasoned operator like Capital Power is expected to set a new benchmark for valuations in the natural gas power sector and could spur further deal-making as other firms seek to scale their presence in the evolving U.S. energy landscape.