NEW YORK: LS Power, a privately-held developer and investor in power infrastructure in North America, has raised US$6bil for its flagship fund, its largest to date, amid a surge in electricity demand driven by artificial intelligence.
The vehicle, LS Power Equity Partners VI, exceeded its initial US$4bil target, according to a statement seen by Bloomberg News. The fund is larger than its predecessor, which raised US$2.7bil in 2024.
“It’s a capital-intensive business, and the opportunity set has never been bigger,” Darpan Kapadia, chief operating officer of Manhattan-based LS Power, said in an interview.
“I think most of the capital we deploy will be into operating projects.”
Demand for the fund illustrates the current interest in megawatts as the US grid comes under strain from the growth in power needs and aging infrastructure.
Existing power plants have become significantly more valuable because of supply chain constraints and the time needed to build new generation plants.
In January, the private equity developer sold a fleet of natural gas plants to publicly-traded power producer NRG Energy Inc in a deal valued at US$12bil.
“Power demand is growing at rates that we haven’t seen for decades,” Kapadia said.
He noted that data centre demand can show up in 12 to 16 months whereas new supply could take more than five years, “so you have this mismatch”.
The fund will invest in natural gas-fired power, renewable energy sources, batteries, smaller energy resources dotting the grid and potentially in other critical energy infrastructure.
LS Power is looking for assets that have “real durability”, he said, adding that the grid of the future will also require more investments in energy efficiency and demand response platforms, where consumers can curtail their usage in exchange for payouts.
Nearly a third of the money raised has already been deployed, with about US$1.7bil going to the firm’s acquisition of natural gas-powered assets. — Bloomberg
