Apollo and Capital Power to Seek Up to $3 Billion in Deals for US Gas Assets
(Bloomberg) -- Apollo Global Management Inc. and a Canadian electricity producer struck a deal to pursue acquisitions of gas-fired power plants in the US.
The agreement between Apollo and Capital Power Corp., an independent power producer based in Edmonton, Alberta, would see the two sides commit as much as $3 billion in equity for such deals, with 75% of that coming from Apollo, according to a statement Wednesday. Capital Power would have a 25% to 50% working interest in each asset.
Capital Power has been focused on adding new projects in the US, where a building boom for data centers is driving demand for new generation capacity. The Apollo relationship will allow the company to move faster on deals, Chief Executive Officer Avik Dey said.
“Historically, we would have to go find that partner once we identify the asset,” Dey said in an interview. “This allows us to go in with a preset partner with an understanding of chasing assets and a strategy together, while also accelerating returns.”
Shares of Capital Power were down 1.6% to C$64.47 as of 10 a.m. in Toronto. They’re roughly flat this year.
The company, which is holding an investor day Wednesday, also announced that it has signed a memorandum of understanding for an electricity supply agreement with “an investment-grade data center developer” in Alberta.
Natural gas demand from US data centers will rise to 6.8 billion cubic feet a day by 2035, from 1.3 billion cubic feet last year, according to forecasts from BloombergNEF.
(Updates with comment from CEO and share price, beginning in the fourth paragraph.)
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