Among a growing minority of healthy major energy sector players, San Diego-based Sempra Energy received a positive response from Standard & Poor’s Ratings Service last Wednesday that it has established an equity fund unit to seek partners in buying presumably bargain-priced energy assets.

An experienced Wall Street energy sector investment banker will head the effort and is eyeing generation, natural gas pipelines and other related assets held by several different parties, according to a Sempra spokesperson.

S&P said the new Sempra Energy Partners would not impact Sempra’s current solid investment-grade credit ratings (A-/Stable/A-2). “While Sempra may invest $200 million over the next few years, its main contribution to the venture is expected to be operational and risk management expertise,” said Swami Venkataraman, a S&P analyst in San Francisco.

There is nothing imminent to announce in terms of potential assets and partnerships, the Sempra spokesperson said, noting that the deals could be joint ventures among single or multiple partners, depending on the assets they target. Richard Vaccari, who has 20 years of investment banking experience, most recently as a managing director at Credit Suisse First Boston, has been hired by Sempra as managing director of Sempra Energy Partners.

Noting that Vaccari brings “key relationships and transactional expertise” to Sempra, Don Felsinger, group president for all of Sempra’s merchant energy businesses, said the “unprecedented number of assets becoming available” spurred the company to create the equity unit to help Sempra “gain an equity stake in some of these assets while preserving our strong balance sheet and maximizing shareholder value.”

The company purchased the proposed Hackberry, LA, LNG import terminal from Dynegy in April (see NGI, April 28) and now plans to team with other energy or financial players to acquire additional power and gas assets that are “consistent with Sempra Energy’s risk profile and strategic approach to the marketplace.”

Venkataraman said the rating agency expected that Sempra’s investments “will be significantly backed by contracts and that all debt at (the new unit) will be non-recourse to Sempra.” Nevertheless, he said the prospective equity plays, along with Sempra’s liquefied natural gas (LNG) projects, underscore “the increasing tilt in Sempra’s business mix towards non-regulated businesses.

“The magnitude and nature of these investments, and the management philosophy underlying them, could impact Sempra’s business profile score and require the company to meet more stringent benchmarks for any given rating level.”

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