Westinghouse Electric, a US nuclear power company, is being bought by a private-equity backed consortium in a $7.9bn deal four years after it emerged from bankruptcy, as the war in Ukraine spurs fresh interest in an industry that had fallen out of investor favour.
Brookfield Renewable Partners, one of the world’s largest clean energy investors, and Cameco, a supplier of uranium fuel, are buying the company in a bet that climate and energy security concerns will revive the nuclear sector’s fortunes.
They will purchase the group, which makes technology used in about half the world’s roughly 440 nuclear reactors, from a separate division of Brookfield Asset Management that runs its private equity investments.
“We’re witnessing some of the best market fundamentals we’ve ever seen in the nuclear energy sector,” said Tim Gitzel, chief executive of Cameco, which is based in Saskatchewan, Canada. “[Nuclear] energy is becoming increasingly important in a world that prioritises electrification, decarbonisation and energy security.”
Western investors and policymakers had until recently shunned the development of new large-scale nuclear plants because of safety concerns and a series of massive cost and schedule overruns. But the urgency to address climate change has pushed nuclear power back into focus, given that it can provide carbon-free power, 24 hours a day regardless of the weather.
The International Energy Agency has said nuclear generation needs to double by 2050 to hit net zero targets.
Moscow’s invasion of Ukraine has shifted it further into the spotlight, as countries hurry to find reliable replacements for Russian oil and gas.
Brookfield Renewable Partners will purchase 51 per cent of Westinghouse for $2.3bn while Cameco will purchase 49 per cent of the company for $2.2bn. When including $3.4bn in existing debt, which is being kept on Westinghouse’s balance sheet, the buyers are paying an enterprise value of $7.9bn.
After the sale is complete, a chunk of the company will be owned by Brookfield Transition Fund, led by former Bank of England governor Mark Carney. “Every credible net zero pathway relies on significant growth in nuclear power,” Carney said.
The sale of Westinghouse represents a large windfall for Brookfield’s private equity business. It invested $1bn in equity to acquire Westinghouse after Toshiba, its former owner, put it into bankruptcy in 2017 amid large cost overruns at projects in Georgia and South Carolina. It will receive roughly $5.5bn through the sale and dividends.
A push to decouple Europe from reliance on Russian gas imports for power generation has shifted attitudes to the power source. There has been a fierce debate over nuclear phaseout in Germany this year and France has vowed to build 14 new reactors by 2050.
In the short term, Westinghouse could benefit from a push to replace suppliers to the more than 30 western reactors that operate on Russian technology. The company has sought expedited approval to provide replacement fuel for plants in countries including the Czech Republic, Hungary, Slovakia, Bulgaria and Finland.
