GIP potential acquisition on AES - What happens next?

Corporate Finance - M&A

Published: 30 Dec 2025

On 1 Oct 2025, The Financial Times revealed that Blackrock-owned Global Infrastructure Partner (GIP) is closing to make a $38 billion deal to buy American-based energy group AES, which would be one of the largest infrastructure takeover if it is completed. Both parties refuse to comment on the news. While the stock in AES Corp. spiked 14% on that day right after the news was announced. The stock of AES Corp. has fallen for about 30% over the past 12 months before the announcement of the news, primarily reflecting investors’ pessimism on the company’s focus on renewable energy. The sector had been under pressure that the Trump administration had signaled a lack of enthusiasm for the sector and then Congress completely withdrew green energy tax credits in July. Rumours of acquisitions had also occurred to the company with GIP and Brookfield Asset Management as the potential bidders. In the 3Q 2025 Financial Review Conference Call on 5 November, the board members did not respond to the acquisition rumours as expected by investors. It is believed that the acquisition is still in the stage of discussion.

A deal to ‘back up’ the AI future AES owns a fleet of renewable power assets, including wind and solar, as well as natural gas and coal assets and two utilities in Indiana and Ohio. The company serves as a renewable power provider to data center companies and has signed deals with technology giants including Google, Microsoft and Amazon. The recent 3Q25 financial report also revealed that 2.9 GW of energy infrastructure have been added year-do-date, on track to the annual target of 3.2 GW in 2025. Despite green energy accounting for most of the company’s growth, it is important to remind that natural gas and coal still make up about half of its operations, according to the company. In general, M&A activities in the renewable energy sector have been active in these years, despite the unfavourable regulatory environment. Bloomberg data revealed that 2025 Year-to-date (as of 18 Sept 2025) renewable-deal-count share is in line with 2024 and remains above the 2010-20 average of 1.6%, demonstrating the sector’s resilience. In particular, private equity and venture capital firms have shown increasing interest,  together engaging in over 91% more renewable energy transactions between 2020 and 2025 than in the prior decade, and 51% fewer traditional oil and gas deals over the same period. As the pioneer of infrastructure takeovers, GIP also invested a lot on the emerging utility need over AI-driven infrastructure. GIP is approaching to close a co-investment deal to acquire Aligned Data Centres, a hyper-scale data centre solutions provider in North America, in an enterprise value of approximately $40 billion. This also marked the one of the year’s biggest transactions for global data centres. Last year, the fund also made a deal to privatize Allete, a state utility that could serve a growing market for data centers. Hence, it is understandable that Blackrock is interested in AES serving as an upstream energy provider in the data centre industry. While the demand for renewables, backed up by both US corporate decarbonization goals and the AI data center, present an attractive growth for AES, in particular, which pledged to reach about 25 GW of renewables capacity by 2027. With its discounted price at the current moment, it might be a good timing for GIP to buy the ‘dip’.

Will the acquisition be smooth? With normal acquisitions usually including a decent portion of cash for the premium, Bloomberg calculation found that AES’s enterprise price is about $45 billion, far exceeding the offering of $38 billion. Such discount is accounted from the high leverage of the company, with at least $29 billion composed of debt with high level of complexity. In particular, the debt mostly concentrates in financing the new renewable projects for capacity expansion. This presented operational and financial difficulty for the post-acquisition company to boost EBITDA, hindering the return of acquisition. As utility companies, the acquisition might also face huge regulatory setbacks. Currently, about 40% of the renewable capacity is outside the US, namely in Chile, Argentina, Colombia and Panama. With complicated approvals across different jurisdictions and energy infrastructure as a crucial asset for all countries, it is possible that some governments may raise concerns over the market power and sovereignty issues in the post-acquisition era.