Blackstone Infrastructure’s decision to acquire TXNM Energy in an $11.5 billion all‐cash transaction underscores the firm’s strategic bet on a persistent rise in U.S. electricity demand. Fueled by data‐center expansion, the electrification of transportation, and an accelerating shift toward renewable resources, power consumption in states like Texas and New Mexico is forecast to reach record highs in the next few years. For Blackstone—whose infrastructure arm manages roughly $60 billion in assets—utilities represent a low‐volatility, regulated business that can capitalize on high‐growth markets and earn stable, inflation‐adjusted returns. The TXNM deal, which values the company at $61.25 per share (a nearly 15 percent premium over its previous closing price), positions Blackstone to ride the wave of mounting grid investments needed to satisfy surging demand.
Rising Demand from Data Centers and Emerging Technologies
U.S. power consumption has been on a steep upward trajectory, driven in large part by the proliferation of data centers that support cloud computing, artificial intelligence (AI) workloads, and cryptocurrency mining. Industry forecasts project that data‐center energy use in Texas alone could grow by more than 25 percent between 2023 and 2028. Major hyperscale operators have announced multi‐billion‐dollar campuses across the Lone Star State, enticed by affordable electricity rates and favorable regulatory climates. Likewise, New Mexico’s arid environment has attracted several new data‐center projects aiming to offload excess heat through innovative cooling solutions—efforts that translate directly into rising power draws.
Beyond data centers, electrification trends in residential and commercial sectors are contributing to a stronger consumption baseline. Electric vehicle (EV) registrations in Texas surged by over 50 percent year‑on‑year in 2024, and New Mexico recently approved new incentives that could push EV adoption to some of the highest per‑capita levels nationally. Each EV added to the grid translates into an incremental kilowatt‑hour demand—one that utilities must anticipate when planning capacity additions. Moreover, the build‑out of heat pumps, home battery systems and rooftop solar paired with storage further complicates load profiles, prompting utilities to modernize infrastructure to handle bi‑directional energy flows.
TXNM Energy, through its two main regulated subsidiaries—Public Service Company of New Mexico (PNM) and Texas‐New Mexico Power (TNMP)—now serves approximately 800,000 homes and businesses across both states. TNMP, in particular, has witnessed double‑digit growth in peak load over the last 18 months. That growth is driven by booming commercial real estate development in Houston, Dallas‐Fort Worth and Albuquerque, where new office parks, mixed‑use developments and university research centers demand uninterrupted, high‑reliability power. Blackstone sees these demand drivers as permanent, offering a compelling case to back TXNM with long‑term capital.
Regulated Returns Meet Infrastructure Modernization Needs
Utilities attract infrastructure investors because they generally operate under regulatory regimes that allow for cost recovery plus an authorized return on equity. In TXNM’s case, state utility commissions in Texas and New Mexico permit ROE (return on equity) pools in the mid‑to‑high single digits—figures that are attractive relative to other regulated assets, especially when coupled with predictable rate cases. For Blackstone, the combination of regulated cash flows and capital expenditure obligations to modernize transmission and distribution assets creates a unique investment proposition: cash yields today, plus upside as the utility invests in grid hardening.
In New Mexico, PNM is already in the midst of a portfolio transformation to meet the state’s mandate of 100 percent carbon‐free generation by 2045. This requires retiring coal‐fired units, integrating more wind and solar capacity, and building battery storage facilities. The cost of this transition needs to be passed through to ratepayers, allowing TXNM—and soon Blackstone—to earn a regulated return on billions of dollars of new transmission assets and renewable infrastructure. Similarly, TNMP has committed over $2 billion in capital projects over the next five years to reinforce lines, add substations and deploy advanced distribution management systems to reduce outage times. Those capital investments dovetail with Blackstone’s willingness to deploy patient capital: the firm has pledged not to increase TXNM’s leverage beyond existing levels, preferring to fund growth through retained earnings and modest equity raises.
Analysts highlight that infrastructure investors have gravitated toward utilities precisely because of the dual benefits of growth and stability. Returns in the mid‑single digits, adjusted for inflation, can outperform low‑coupon sovereign bonds over the long haul—especially if a utility’s rate base expands faster than regulators’ allowed ROE declines. By contrast, merchant generation assets (where power is sold at wholesale prices) face commodity and volume risk. In regulated utilities, demand growth often translates directly into higher rate base, and hence, higher allowed revenues. For Blackstone, TXNM ticks all the boxes: robust demand growth in Texas, accelerating clean energy transitions in New Mexico, and a commission framework that provides visibility on future earnings.
Competitive Landscape: Peers Also Targeting Utilities
Blackstone is far from alone in chasing utility assets. In late 2024 and early 2025, several large private equity firms and pension funds made major inroads into U.S. power infrastructure. KKR and PSP Investments jointly purchased a 20 percent stake in American Electric Power’s transmission network for $2.82 billion, citing a need to upgrade aging grid arteries to accommodate new renewable generation. Meanwhile, NRG Energy struck a $12 billion deal with LS Power to acquire a portfolio of gas‑fired and renewable generation assets in key demand centers. Those moves reflect a broader industry recognition that utilities are at the epicenter of a decarbonizing economy—sectors where electrification, energy storage and resilience will command ever‑greater capital.
What sets Blackstone’s TXNM bid apart, however, is the balance between growth exposure and regulated stability. In many coastal states, utility commissions remain cautious about aggressive rate hikes, often requiring multi‑year earnings tests that introduce regulatory lag. By contrast, Texas employs a “base rate” logic combined with formula rates that adjust compensation based on actual costs almost in real time. This formulaic approach allows TNMP to earn a consistent spread over its cost of debt, insulating its allowed returns from inflationary pressures. New Mexico’s framework, although more traditional, has shown a willingness to approve cost‑recovery mechanisms for large renewable projects, giving PNM a clear pathway for revenue growth. Blackstone recognized these nuances and determined that TXNM’s footprint offered a more attractive combination of demand tailwinds and supportive regulators than other available utility targets.
From a corporate responsibility standpoint, Blackstone is presenting the TXNM deal as a way to accelerate clean energy goals at both PNM and TNMP. In public filings, TXNM leadership emphasized that it now sources over two‑thirds of PNM’s electricity from carbon‑free resources—primarily wind and solar—thanks to recent capacity additions. However, to fully align with New Mexico’s 100 percent clean mandate, the company must invest further in storage, transmission reinforcements and distributed energy programs such as rooftop solar plus batteries. Blackstone’s perpetual capital model—where investors are not forced to exit after a fixed horizon—allows TXNM management to pursue multi‑decade projects without concerns over quarterly fundraising cycles.
Similarly, TNMP has been adopting advanced grid technologies such as feeder automation, fault detection and self‑healing equipment to minimize outages in severe weather events. In Texas, where hurricanes and tornadoes frequently disrupt service, those modernizations not only reduce operating expenses but also underpin rate cases seeking incremental recovery of storm hardening costs. Blackstone intends to help fund these initiatives without significantly increasing TXNM’s debt ratios, thus maintaining the current credit metrics that regulators and rating agencies rely upon when authorizing capital expenditures.
Local communities also stand to gain from Blackstone’s commitment to retaining TXNM’s workforce and honoring existing labor contracts. The company has pledged that PNM and TNMP will continue to be headquartered in Albuquerque and Mesquite (near Dallas), respectively, and that field‐level jobs—spanning lineworkers, engineers and customer service representatives—will remain intact. Blackstone executives have underscored their desire to maintain a “localized management ethos,” preserving relationships with state utility commissions, municipal stakeholders and Indigenous communities that hold land rights in New Mexico. In a sector where “rate shock” and layoffs can swiftly erode public support, Blackstone is packaging this acquisition as a vote of confidence in both TXNM’s employees and its customer base.
Financial Structure and Management Transition
To complete the $11.5 billion purchase—comprising roughly $9.7 billion of equity and $1.8 billion of assumed debt—Blackstone has lined up a syndicate of banks prepared to underwrite a private placement of $400 million in new TXNM shares. Current shareholders will be offered $61.25 per share in cash, while Blackstone will separately purchase newly issued stock at $50 per share to fund TXNM’s near‑term capex plans. In order to satisfy board and regulatory requirements, TXNM itself will match the $400 million equity infusion, ensuring that the utility enters Blackstone’s portfolio with a healthy balance sheet.
Among the critical conditions to closing are approvals from the New Mexico Public Regulation Commission, the Texas Public Utility Commission, the Federal Energy Regulatory Commission, and the U.S. Department of Justice’s antitrust division. Based on typical regulatory timelines for large utility deals, the transaction is expected to receive all requisite nods and be finalized in the second half of 2026. Following the close, CEO Pat Collawn will step down, and Don Tarry—currently Chairman and President of TXNM—will assume the roles of President and CEO. This management succession plan aims to provide continuity, as Tarry has been deeply involved in TXNM’s clean energy and grid modernization strategies for years.
Bond investors have shown a growing appetite for “inflation‑linked” infrastructure investments—assets whose revenues adjust with rising prices. Utilities fit that definition perfectly: as input costs for materials, labor and financing climb, regulators often allow rate increases to offset those expenses, preserving a utility’s real returns. Blackstone’s Chief Infrastructure Strategist noted in an internal memo that TXNM’s formulaic rate framework in Texas can adjust ROEs to account for inflationary drag, thus offering partial protection against a rising interest‐rate environment. In New Mexico, while rate cases occur less frequently, PNM’s cost trackers for fuel, purchased power and environmental compliance allow revenue to keep pace with variable costs.
Looking ahead, TXNM’s long‑term revenue projections are underpinned by several robust drivers: first, the relentless growth of data centers requiring uninterrupted, high‑quality power; second, the electrification of transportation and heating, which could drive residential and commercial load growth of 2 percent to 3 percent annually—well above historical trends; and third, continued regulatory support for grid investments to achieve renewable integration and resilience. By harnessing these factors, Blackstone expects TXNM’s rate base to grow at a mid‑teens compound annual rate over the next decade, justifying a stable run‑rate cash yield in the 5 percent to 6 percent range on invested capital.
Of course, the utility sector is not without risks. Rate cases can become contentious, as customer advocates and environmental groups sometimes challenge large capital spend programs as overly costly or unnecessary. If regulators in Dallas or Santa Fe push back on proposed capital outlays for renewable integration or transmission upgrades, TXNM’s earnings growth could prove more muted than projected. Similarly, emerging federal legislation—such as new climate provisions or accelerated depreciation rules—could alter the economics of grid investments or force sudden cost shifts onto utilities. Blackstone has indicated that it will work closely with both PNM and TNMP to develop detailed stakeholder engagement plans, aiming to preemptively address such regulatory pushback before formal rate filings occur.
Competition is also heating up within the utility investment space. Other private equity firms and pension funds have flagged their intent to target utilities in fast‐growing Sun Belt markets, leading to elevated purchase multiples. Blackstone’s willingness to pay a 15 percent premium for TXNM, while echoing similar bids from rivals, reflects its conviction that demand tailwinds will be stronger and more durable than in other regions. The firm’s strategy hinges on disciplined capital deployment—focusing on markets where decarbonization mandates align with population growth and technology adoption will drive load growth. In this sense, TXNM’s dual‐state footprint straddles two complimentary dynamics: Texas’s explosive data‑center boom and New Mexico’s aggressive renewable‑energy targets.
By committing $11.5 billion to acquire TXNM Energy, Blackstone Infrastructure is placing a calculated wager on the enduring trajectory of U.S. power consumption. The deal hinges on three core assumptions: that data center growth and electrification trends will keep demand rising; that state regulatory frameworks will allow cost recovery plus reasonable returns; and that grid modernization and clean energy integration will unlock further capital‐efficient growth. As investor interest in yield‐generating, sustainable infrastructure continues to ramp up, utilities like TXNM stand at the nexus of economic development, technological innovation and climate goals. For Blackstone, the acquisition offers not just a stable income stream but also a front‑row seat to one of the most dynamic segments of the U.S. economy—where electricity powers everything from AI supercomputers to the electric vehicles increasingly populating suburban driveways. With the deal slated to close in late 2026, all eyes will be on whether TXNM can execute its expansion plans on schedule and whether Blackstone’s deep pockets and experience will translate into both reliable returns and tangible progress toward a cleaner, more resilient grid.
(Source:www.reuters.com)
Rising Demand from Data Centers and Emerging Technologies
U.S. power consumption has been on a steep upward trajectory, driven in large part by the proliferation of data centers that support cloud computing, artificial intelligence (AI) workloads, and cryptocurrency mining. Industry forecasts project that data‐center energy use in Texas alone could grow by more than 25 percent between 2023 and 2028. Major hyperscale operators have announced multi‐billion‐dollar campuses across the Lone Star State, enticed by affordable electricity rates and favorable regulatory climates. Likewise, New Mexico’s arid environment has attracted several new data‐center projects aiming to offload excess heat through innovative cooling solutions—efforts that translate directly into rising power draws.
Beyond data centers, electrification trends in residential and commercial sectors are contributing to a stronger consumption baseline. Electric vehicle (EV) registrations in Texas surged by over 50 percent year‑on‑year in 2024, and New Mexico recently approved new incentives that could push EV adoption to some of the highest per‑capita levels nationally. Each EV added to the grid translates into an incremental kilowatt‑hour demand—one that utilities must anticipate when planning capacity additions. Moreover, the build‑out of heat pumps, home battery systems and rooftop solar paired with storage further complicates load profiles, prompting utilities to modernize infrastructure to handle bi‑directional energy flows.
TXNM Energy, through its two main regulated subsidiaries—Public Service Company of New Mexico (PNM) and Texas‐New Mexico Power (TNMP)—now serves approximately 800,000 homes and businesses across both states. TNMP, in particular, has witnessed double‑digit growth in peak load over the last 18 months. That growth is driven by booming commercial real estate development in Houston, Dallas‐Fort Worth and Albuquerque, where new office parks, mixed‑use developments and university research centers demand uninterrupted, high‑reliability power. Blackstone sees these demand drivers as permanent, offering a compelling case to back TXNM with long‑term capital.
Regulated Returns Meet Infrastructure Modernization Needs
Utilities attract infrastructure investors because they generally operate under regulatory regimes that allow for cost recovery plus an authorized return on equity. In TXNM’s case, state utility commissions in Texas and New Mexico permit ROE (return on equity) pools in the mid‑to‑high single digits—figures that are attractive relative to other regulated assets, especially when coupled with predictable rate cases. For Blackstone, the combination of regulated cash flows and capital expenditure obligations to modernize transmission and distribution assets creates a unique investment proposition: cash yields today, plus upside as the utility invests in grid hardening.
In New Mexico, PNM is already in the midst of a portfolio transformation to meet the state’s mandate of 100 percent carbon‐free generation by 2045. This requires retiring coal‐fired units, integrating more wind and solar capacity, and building battery storage facilities. The cost of this transition needs to be passed through to ratepayers, allowing TXNM—and soon Blackstone—to earn a regulated return on billions of dollars of new transmission assets and renewable infrastructure. Similarly, TNMP has committed over $2 billion in capital projects over the next five years to reinforce lines, add substations and deploy advanced distribution management systems to reduce outage times. Those capital investments dovetail with Blackstone’s willingness to deploy patient capital: the firm has pledged not to increase TXNM’s leverage beyond existing levels, preferring to fund growth through retained earnings and modest equity raises.
Analysts highlight that infrastructure investors have gravitated toward utilities precisely because of the dual benefits of growth and stability. Returns in the mid‑single digits, adjusted for inflation, can outperform low‑coupon sovereign bonds over the long haul—especially if a utility’s rate base expands faster than regulators’ allowed ROE declines. By contrast, merchant generation assets (where power is sold at wholesale prices) face commodity and volume risk. In regulated utilities, demand growth often translates directly into higher rate base, and hence, higher allowed revenues. For Blackstone, TXNM ticks all the boxes: robust demand growth in Texas, accelerating clean energy transitions in New Mexico, and a commission framework that provides visibility on future earnings.
Competitive Landscape: Peers Also Targeting Utilities
Blackstone is far from alone in chasing utility assets. In late 2024 and early 2025, several large private equity firms and pension funds made major inroads into U.S. power infrastructure. KKR and PSP Investments jointly purchased a 20 percent stake in American Electric Power’s transmission network for $2.82 billion, citing a need to upgrade aging grid arteries to accommodate new renewable generation. Meanwhile, NRG Energy struck a $12 billion deal with LS Power to acquire a portfolio of gas‑fired and renewable generation assets in key demand centers. Those moves reflect a broader industry recognition that utilities are at the epicenter of a decarbonizing economy—sectors where electrification, energy storage and resilience will command ever‑greater capital.
What sets Blackstone’s TXNM bid apart, however, is the balance between growth exposure and regulated stability. In many coastal states, utility commissions remain cautious about aggressive rate hikes, often requiring multi‑year earnings tests that introduce regulatory lag. By contrast, Texas employs a “base rate” logic combined with formula rates that adjust compensation based on actual costs almost in real time. This formulaic approach allows TNMP to earn a consistent spread over its cost of debt, insulating its allowed returns from inflationary pressures. New Mexico’s framework, although more traditional, has shown a willingness to approve cost‑recovery mechanisms for large renewable projects, giving PNM a clear pathway for revenue growth. Blackstone recognized these nuances and determined that TXNM’s footprint offered a more attractive combination of demand tailwinds and supportive regulators than other available utility targets.
From a corporate responsibility standpoint, Blackstone is presenting the TXNM deal as a way to accelerate clean energy goals at both PNM and TNMP. In public filings, TXNM leadership emphasized that it now sources over two‑thirds of PNM’s electricity from carbon‑free resources—primarily wind and solar—thanks to recent capacity additions. However, to fully align with New Mexico’s 100 percent clean mandate, the company must invest further in storage, transmission reinforcements and distributed energy programs such as rooftop solar plus batteries. Blackstone’s perpetual capital model—where investors are not forced to exit after a fixed horizon—allows TXNM management to pursue multi‑decade projects without concerns over quarterly fundraising cycles.
Similarly, TNMP has been adopting advanced grid technologies such as feeder automation, fault detection and self‑healing equipment to minimize outages in severe weather events. In Texas, where hurricanes and tornadoes frequently disrupt service, those modernizations not only reduce operating expenses but also underpin rate cases seeking incremental recovery of storm hardening costs. Blackstone intends to help fund these initiatives without significantly increasing TXNM’s debt ratios, thus maintaining the current credit metrics that regulators and rating agencies rely upon when authorizing capital expenditures.
Local communities also stand to gain from Blackstone’s commitment to retaining TXNM’s workforce and honoring existing labor contracts. The company has pledged that PNM and TNMP will continue to be headquartered in Albuquerque and Mesquite (near Dallas), respectively, and that field‐level jobs—spanning lineworkers, engineers and customer service representatives—will remain intact. Blackstone executives have underscored their desire to maintain a “localized management ethos,” preserving relationships with state utility commissions, municipal stakeholders and Indigenous communities that hold land rights in New Mexico. In a sector where “rate shock” and layoffs can swiftly erode public support, Blackstone is packaging this acquisition as a vote of confidence in both TXNM’s employees and its customer base.
Financial Structure and Management Transition
To complete the $11.5 billion purchase—comprising roughly $9.7 billion of equity and $1.8 billion of assumed debt—Blackstone has lined up a syndicate of banks prepared to underwrite a private placement of $400 million in new TXNM shares. Current shareholders will be offered $61.25 per share in cash, while Blackstone will separately purchase newly issued stock at $50 per share to fund TXNM’s near‑term capex plans. In order to satisfy board and regulatory requirements, TXNM itself will match the $400 million equity infusion, ensuring that the utility enters Blackstone’s portfolio with a healthy balance sheet.
Among the critical conditions to closing are approvals from the New Mexico Public Regulation Commission, the Texas Public Utility Commission, the Federal Energy Regulatory Commission, and the U.S. Department of Justice’s antitrust division. Based on typical regulatory timelines for large utility deals, the transaction is expected to receive all requisite nods and be finalized in the second half of 2026. Following the close, CEO Pat Collawn will step down, and Don Tarry—currently Chairman and President of TXNM—will assume the roles of President and CEO. This management succession plan aims to provide continuity, as Tarry has been deeply involved in TXNM’s clean energy and grid modernization strategies for years.
Bond investors have shown a growing appetite for “inflation‑linked” infrastructure investments—assets whose revenues adjust with rising prices. Utilities fit that definition perfectly: as input costs for materials, labor and financing climb, regulators often allow rate increases to offset those expenses, preserving a utility’s real returns. Blackstone’s Chief Infrastructure Strategist noted in an internal memo that TXNM’s formulaic rate framework in Texas can adjust ROEs to account for inflationary drag, thus offering partial protection against a rising interest‐rate environment. In New Mexico, while rate cases occur less frequently, PNM’s cost trackers for fuel, purchased power and environmental compliance allow revenue to keep pace with variable costs.
Looking ahead, TXNM’s long‑term revenue projections are underpinned by several robust drivers: first, the relentless growth of data centers requiring uninterrupted, high‑quality power; second, the electrification of transportation and heating, which could drive residential and commercial load growth of 2 percent to 3 percent annually—well above historical trends; and third, continued regulatory support for grid investments to achieve renewable integration and resilience. By harnessing these factors, Blackstone expects TXNM’s rate base to grow at a mid‑teens compound annual rate over the next decade, justifying a stable run‑rate cash yield in the 5 percent to 6 percent range on invested capital.
Of course, the utility sector is not without risks. Rate cases can become contentious, as customer advocates and environmental groups sometimes challenge large capital spend programs as overly costly or unnecessary. If regulators in Dallas or Santa Fe push back on proposed capital outlays for renewable integration or transmission upgrades, TXNM’s earnings growth could prove more muted than projected. Similarly, emerging federal legislation—such as new climate provisions or accelerated depreciation rules—could alter the economics of grid investments or force sudden cost shifts onto utilities. Blackstone has indicated that it will work closely with both PNM and TNMP to develop detailed stakeholder engagement plans, aiming to preemptively address such regulatory pushback before formal rate filings occur.
Competition is also heating up within the utility investment space. Other private equity firms and pension funds have flagged their intent to target utilities in fast‐growing Sun Belt markets, leading to elevated purchase multiples. Blackstone’s willingness to pay a 15 percent premium for TXNM, while echoing similar bids from rivals, reflects its conviction that demand tailwinds will be stronger and more durable than in other regions. The firm’s strategy hinges on disciplined capital deployment—focusing on markets where decarbonization mandates align with population growth and technology adoption will drive load growth. In this sense, TXNM’s dual‐state footprint straddles two complimentary dynamics: Texas’s explosive data‑center boom and New Mexico’s aggressive renewable‑energy targets.
By committing $11.5 billion to acquire TXNM Energy, Blackstone Infrastructure is placing a calculated wager on the enduring trajectory of U.S. power consumption. The deal hinges on three core assumptions: that data center growth and electrification trends will keep demand rising; that state regulatory frameworks will allow cost recovery plus reasonable returns; and that grid modernization and clean energy integration will unlock further capital‐efficient growth. As investor interest in yield‐generating, sustainable infrastructure continues to ramp up, utilities like TXNM stand at the nexus of economic development, technological innovation and climate goals. For Blackstone, the acquisition offers not just a stable income stream but also a front‑row seat to one of the most dynamic segments of the U.S. economy—where electricity powers everything from AI supercomputers to the electric vehicles increasingly populating suburban driveways. With the deal slated to close in late 2026, all eyes will be on whether TXNM can execute its expansion plans on schedule and whether Blackstone’s deep pockets and experience will translate into both reliable returns and tangible progress toward a cleaner, more resilient grid.
(Source:www.reuters.com)
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