The Canada Pension Plan Investment Board (CPPIB) has agreed to sell its entire stake in U.S.-based power producer Calpine Corporation to Constellation Energy for a total of $2.6 billion, including cash and stock.

The deal has widespread industrial real estate implications. It is part of Baltimore-based Constellation’s acquisition of Calpine.

CPPIB is slated to receive net proceeds of approximately US$700 million in cash and US$1.9 billion in Constellation stock.

Houston-based Calpine operates 79 energy facilities across the U.S. CPPIB acquired its 15.75% stake in Calpine in 2018 through a co-investment alongside Energy Capital Partners and Access Industries.

“We are pleased by the success of our investment in Calpine and view this transaction as an excellent opportunity to realise strong returns for the CPP Fund,” said Bill Rogers, managing director and head of sustainable Energies at CPPIB. “We look forward to participating in Constellation’s future growth, enhanced by the increased scale and cash flow resulting from this combination.”

The merger will expand the combined company’s footprint across the continental United States, particularly in Texas, the country’s fastest-growing market for electricity demand, as well as key markets like California, Delaware, New York, Pennsylvania, and Virginia.

“Calpine serves as a good example of CPPIB’s approach to investing across the energy spectrum, which is to invest in companies that play a critical role in delivering affordable, reliable power while helping them progress towards the decarbonisation of their portfolios,” Rogers added.

The deal is expected to close in the second half of 2025, subject to customary closing conditions and regulatory approvals from bodies including the Federal Energy Regulatory Commission, the Department of Justice, and the Public Utility Commission of Texas.

Photo: Calpine