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Canadian funds part of consortium ready to sell stake in Puget Energy

Macquarie Group CEO Nicholas Moore

Two Canadian funds are part of a group preparing to sell its stake in Washington state's largest utility, people familiar with the matter said.

The infrastructure arm of Australian firm Macquarie Group Ltd. is in the early stages of studying a sale of its 42% interest in Puget Energy Inc.'s parent company, Puget Holdings LLC, according to the people. The stake could fetch about $2 billion, the people said, asking not to be identified discussing private information.

A group of investors led by Macquarie Infrastructure took Puget Energy private in 2009 in a deal valued at about $3.4 billion. The consortium, which included the C$316.7 billion ($235.1 billion) Canada Pension Plan Investment Board, Toronto, and C$123 billion British Columbia Investment Management Corp., Victoria, set up an entity called Puget Holdings to buy all of the utility's publicly traded shares.

Other Puget Energy stakeholders are the C$90.3 billion Alberta Investment Management Corp., Edmonton, and an infrastructure trust of Sydney-based First State Super, which has A$57 billion ($42.8 billion) in superannuation assets and another A$24 billion in retirement assets and was a Macquarie affiliate when the group bought Puget.

Puget Holdings's other investors have no plans to sell their stakes and may exercise their right of first refusal to buy Macquarie's position, the people said.

Representatives for Alberta Investment, BCIMC, Macquarie and Puget declined to comment. A representative for CPPIB didn't immediately respond to requests for comment. First State didn't respond to requests for comment outside of regular business hours.

Macquarie Infrastructure Partners is selling assets held by funds raised in 2006 and 2008, which are now paying out to investors after about 10 years. The firm agreed to sell New England water utility Aquarion Water Co. to Eversource Energy this month, and last year offloaded its interest in power company Duquesne Light Holdings.

Nicholas Moore, Macquarie Group's chief executive officer, said in a May interview that the infrastructure division has A$10 billion worth of “dry powder” and a shopping list of potential investments. That same month, Macquarie led an investor group that agreed to buy a majority stake in Australian electricity distributor Endeavour Energy for A$2.9 billion.

Macquarie's infrastructure arm has A$152.4 billion invested in 135 portfolio companies, according to a company statement last month. Typical assets held include airports, toll roads and pipelines.

Puget Energy's main operating unit, Puget Sound Energy, is the largest electric and gas utility based in Washington with close to 2 million residential, commercial and industrial customers, according to its annual report.