Ridgewood Infrastructure Announces Sale of SiEnergy Regulated Utility

Rhea-AI Summary

Ridgewood Infrastructure has announced the sale of its 80% stake in SiEnergy to Northwest Natural Holding Company (NYSE: NWN). SiEnergy operates as a regulated natural gas utility serving residential and commercial customers in the Houston, Dallas, and Austin metropolitan areas.

Under Ridgewood's ownership since 2019, SiEnergy has experienced significant growth, expanding its customer base from approximately 20,000 to over 70,000 customers, establishing itself as one of the fastest-growing natural gas distribution utilities in the nation. RBC Capital Markets served as financial advisor, while White & Case LLP provided legal counsel for the transaction.

Positive

• Significant customer base growth from 20,000 to 70,000+ under Ridgewood's ownership
• Strategic acquisition by NYSE-listed Northwest Natural Holding Company (NWN)
• Strong presence in major Texas metropolitan markets (Houston, Dallas, Austin)

Negative

• None.

Insights

Financial Analyst

This acquisition marks a significant strategic expansion for Northwest Natural Holding Company into the high-growth Texas market. The purchase of SiEnergy's 80% stake provides immediate access to over 70,000 customers across major metropolitan areas like Houston, Dallas and Austin. The rapid customer base growth from 20,000 to 70,000 under Ridgewood's ownership demonstrates the robust market opportunity in Texas's expanding suburban areas. For NWN, which has traditionally operated in the Pacific Northwest, this represents a major geographical diversification and growth catalyst. Texas's favorable regulatory environment and strong population growth trends make this an attractive market entry. The transaction aligns with the industry trend of larger utilities acquiring regional players to achieve scale and geographic diversification. From a financial perspective, regulated utilities typically provide stable, predictable cash flows, which should support NWN's dividend sustainability and credit metrics. The involvement of RBC Capital Markets suggests this is a substantial transaction that will likely require careful balance sheet management.

Market Research Analyst

The Texas natural gas market presents compelling demographics that make this acquisition particularly valuable. The state's population grew 30.1% from 2000 to 2020, with Houston, Dallas and Austin metropolitan areas experiencing even higher growth rates. These regions are characterized by new housing developments and commercial expansion, which naturally drives demand for gas utility services. SiEnergy's 250% customer growth over just four years validates the market's robust expansion potential. For NWN investors, this provides exposure to one of the nation's most dynamic energy markets, diversifying away from the slower-growth Pacific Northwest region. The regulatory framework in Texas is generally considered utility-friendly, with mechanisms that support timely cost recovery and reasonable returns on equity. This transaction represents a shift in NWN's growth strategy from organic expansion to strategic M&A, potentially signaling more acquisitions in high-growth markets.

Utilities Industry Expert

This acquisition reflects the ongoing consolidation trend in the U.S. utilities sector, where smaller, high-growth utilities are being absorbed by larger, established players seeking expansion opportunities. SiEnergy's infrastructure serving three major Texas metros provides NWN with instant scale in a market characterized by strong natural gas demand and favorable regulatory treatment. The transaction timing is strategic, coming as Texas continues to prioritize natural gas in its energy mix, unlike some other states pushing for electrification. The operational synergies should be meaningful, as NWN can leverage its established operational practices and technology platforms across SiEnergy's network. The 3.5x customer growth under Ridgewood's ownership suggests well-maintained infrastructure and effective customer acquisition strategies, reducing integration risks for NWN. This deal positions NWN as a multi-state utility operator, potentially improving its regulatory risk profile and creating a platform for further expansion in the Southern United States.

NEW YORK, Jan. 8, 2025 /PRNewswire/ -- Ridgewood Infrastructure, a leading infrastructure investment firm focused on essential infrastructure in the U.S. lower middle market, today announced the successful sale of its 80% interest in SiEnergy to Northwest Natural Holding Company (NYSE: NWN).

SiEnergy is a regulated utility providing essential natural gas services to residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin. Since acquiring the business in 2019, Ridgewood Infrastructure has led the transformation of SiEnergy into one of the fastest-growing natural gas distribution utilities in the nation. Under Ridgewood's stewardship, SiEnergy organically expanded its service base from approximately 20,000 to more than 70,000 customers.

"SiEnergy exemplifies Ridgewood Infrastructure's continued ability to create differentiated investments on behalf of our investors," said Michael Albrecht, Managing Partner of Ridgewood Infrastructure. "Our focus on operational and service excellence ensured the company was able to scale and will benefit SiEnergy's customers for years to come."

Albrecht added: "We are pleased with the accomplishments of SiEnergy, which reflect the dedication of the company's leadership team, employees, and partners, all of whom have played a pivotal role in its success."

RBC Capital Markets, LLC acted as exclusive financial advisor and White & Case LLP as legal advisor to Ridgewood Infrastructure.

About Ridgewood Infrastructure

Ridgewood Infrastructure is a leading infrastructure investor in the U.S. lower middle market with sectors of focus including Water, Energy Transition, Transportation, and Utilities. For more information, visit www.ridgewoodinfrastructure.com.

Contact Information:
Ridgewood Infrastructure
527 Madison Avenue, 18th Floor
New York, NY 10022
Phone: (212) 867-0050
Inquiries@RidgewoodInfrastructure.com

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SOURCE Ridgewood Infrastructure

FAQ

How many customers did SiEnergy grow to under Ridgewood Infrastructure's ownership?

Under Ridgewood Infrastructure's ownership from 2019, SiEnergy grew its customer base from approximately 20,000 to more than 70,000 customers.

Which markets does SiEnergy serve as a natural gas utility?

SiEnergy serves residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas.

What percentage stake did Northwest Natural Holding Company (NWN) acquire in SiEnergy?

Northwest Natural Holding Company (NWN) acquired Ridgewood Infrastructure's 80% interest in SiEnergy.

When did Ridgewood Infrastructure initially acquire SiEnergy?

Ridgewood Infrastructure acquired SiEnergy in 2019.

Who served as advisors in the SiEnergy sale to NWN?

RBC Capital Markets, acted as exclusive financial advisor, and White & Case LLP served as legal advisor to Ridgewood Infrastructure.