Orlando, Florida (Reuters) - Canadian power utility Fortis Inc FTS.TO is looking to expand in the United States and could have as many U.S. assets as Canadian within 10 years, a top Fortis executive said on Monday.
Chief Financial Officer Barry Perry said in an interview that the company’s preference is to acquire regulated transmission and distribution utilities, but it would also consider buying utilities with generation assets as long as they are regulated.
“Our focus really is solely on the U.S. market at this point,” Perry said on the sidelines of the Edison Electric Institute financial conference.
Fortis, the largest investor-owned distribution utility in Canada, has already been considering transactions as large as $5 billion to $6 billion in the United States, he said.
“Generally, on our own, we would look at stuff in the $1 to $5 billion enterprise value range. We have considered a larger transaction at least once above that level, but we would typically involve a partner in that kind of approach,” Perry said.
The utility has relationships with Canadian pension funds that are looking to expand their investments in infrastructure, Perry said. These funds could supply Fortis with plenty of extra firepower should it find an expensive, but attractive target.
“The Canadian pension fund community is very anxious to deploy capital in infrastructure and we have participated in one process where we did have a large fund in Canada that was helping us execute the transaction,” he said.
“Our preference is to do deals ourselves, rather than have a partner. But once you get above a certain size, clearly from a risk perspective we need to mitigate that, so that’s why we consider it.”
Fortis came close in May to acquiring Central Vermont Public Service Corp CV.N for some $470 million, but that bid for a foothold in the U.S. utility market, was trumped two months later by a rival offer from Quebec-based Gaz Metro.
Perry said Fortis was on the lookout for much larger U.S. deals these days because there were few opportunities remaining in Canada that are not owned by governments or municipalities.
“The logical next step for Fortis was to consider buying a regulated U.S. utility,” said Perry.
“For us, it’s not unrealistic to expect that over the next five- to 10-year period we could have as many assets in the U.S. as we have in Canada.”
Reporting by Michael Erman in Orlando; editing by Peter Galloway