Northern Star Generation

Northern Star Generation LLC is an investment platform created by Highstar to acquire a diversified portfolio of power generation facilities throughout the U.S. from a major integrated energy services company. Highstar invested in Northern Star in June 2004 and sold the investment in August 2007. Highstar controlled a 50% interest in Northern Star with a financial partner invited by Highstar to participate in this investment. Highstar also created a successful co-investment program in Northern Star.

Highstar's Value-Add

Creation of an Independent Brand and
Management Team:

Northern Star was Highstar II's contracted power generation business in the US and was formed by Highstar to purchase interests in 15 power plants from El Paso. Prior to Highstar's investment, all but two of the facilities had limited recourse, project finance debt. The transfer of these interests was time consuming due to the numerous consents required from El Paso's various partners and project lenders.

El Paso sold the portfolio as part of a corporate reorganization and restructuring. The power plant portfolio was not part of a discrete business unit within El Paso and had no identity apart from the broader El Paso business. The portfolio was managed by El Paso on a 'shared services basis' with other business units. In order to successfully manage this business post-closing, a new owner needed to create an independent brand and build a management team from scratch. As El Paso was selling its interest in each of the power plants separately, we had multiple complex closings to manage. While Highstar was integrating these interests into the broader Northern Star platform, one of our Partners assumed the role of interim CEO while the full executive team was recruited. The operational experience of the Highstar Team, combined with our extensive network of contacts in the power generation industry, enabled us to rise to the challenges this situation presented.

The establishment of a strong team was critical to our successful management of these assets and was a key element in the sale of this business to an infrastructure fund in August 2007. We believe that the quality of the management team we created at Northern Star was an important investment consideration for the buyer.