Funds managed by global alternative asset manager Blackstone Credit & Insurance, with participation from Apollo, an alternative asset manager, and insurance vehicles and accounts managed by private equity company Kohlberg Kravis Roberts & Co Inc, (KKR), have established a power innovation joint venture (JV) with Williams Companies Inc., an American energy company, in a deal that provides US$ 5.34 billion in committed capital to develop power projects, to cater to Blackstone’s vast data center and AI infrastructure portfolio.
Readers would recall that over the last few years, Blackstone has been making a series of huge investments in data centers across the US, Australia, and Asia. But data centers are notorious power guzzlers. In the US alone, data centers account for 4.4 percent of the national electricity consumed, as per research by Electric Power Research Institute (EPRI). With the advent of AI, the power demand for data centers could increase from 31 GW in 2025, to 66 GW in 2027 as per a report from Goldman Sachs.
“Williams is a leader in meeting the country’s rapidly growing power demands, including providing critical hard assets to serve the AI infrastructure buildout,” said Robert Horn, Global Head, Infrastructure & Asset-Based Credit at Blackstone and Rick Campbell, Senior Managing Director, Blackstone Credit & Insurance in a press release. “This is an area where we share deep conviction and expertise and we’re proud to support Williams with a scaled, high-grade capital solution fit for these innovative projects.”
Williams has agreed to sell a 49 percent noncontrolling stake in five behind-the-meter power projects: Socrates, Apollo, Aquila, Socrates the Younger and Neo. Under the agreement, the investor group will provide US$ 4.4 billion to fund 49 percent of expected growth capital expenditures for the projects with US$ 900 million in additional consideration to Williams.
Williams will retain a 51 percent ownership stake, along with commercial and operational control. Cash distributions will be split according to ownership, Williams receiving 51 percent and the investor group 49 percent. Williams also has the right to buy back the investors’ stake between years seven and 14 based on the outstanding investment balance.
Chad Zamarin, Williams President and Chief Executive Officer, said, “The investment from Blackstone, and the further support from top-tier investment firms Apollo and KKR, underscores the quality and importance of our turnkey energy infrastructure platform in serving rapidly growing power demand, with more than 2.6 GW announced, our Power Innovation portfolio is scaling rapidly, and we look forward to delivering these critical energy solutions for American companies.”
The investment will be reported as a noncontrolling interest in Williams’ financial statements and this transaction is expected to reduce its capital requirements and corporate debt while preserving balance sheet capacity for future investments. Williams also reaffirmed its 2026 guidance, continuing to expect adjusted EBITDA in the upper half of its US$ 8.05 billion to US$ 8.35 billion range, growth capital expenditures of US$ 7 billion to US$ 7.6 billion, maintenance capital expenditures of US$ 850 million to US$ 950 million and a leverage ratio midpoint of about 3.6x while all other per-share guidance remained unchanged.
During the transaction, Citi, a global bank and investment company, served as financial advisor to Williams, with global law firm Davis Polk & Wardwell acting as its legal counsel. Morgan Stanley & Co. LLC served as financial advisor and law firm Kirkland & Ellis acted as the legal counsel to Blackstone.