The artificial intelligence (AI)-driven power boom is creating a new hunting ground for private markets investors as utilities turn to divestitures to help fund unprecedented spending plans.

Investor-owned utilities plan to spend more than USD 1.1tn between 2025 and 2029 to expand networks, build generation, and connect new customers. But to do so, they need capital faster than they can comfortably raise it.

“As a result, they’re selling small non-core assets,” Jeff Jenkins, a co-founder and partner at Bernhard Capital Partners (BCP), told this news service. “They don’t really want to dilute themselves, so they see these smaller exits as a way to bring in that capital.”

The resulting wave of divestitures has expanded the opportunity set for Baton Rouge, Louisiana-based BCP’s infrastructure strategy, which is targeting water, gas, and electric utilities with USD 1bn-USD 2bn in enterprise value.

“Frankly, we have more opportunities than we have capital,” Jenkins said.

The firm is currently raising its second dedicated vehicle, BCP Infrastructure Fund II, which is expected to close in 1Q27. This news service reported in May that BCP had raised USD 1bn for the fund, which has a USD 2bn target. A source familiar with the matter said it is expected to be nearly fully invested by the time of its final close.

BCP declined to comment on its fundraising efforts.

Competition for utility assets, however, is intensifying as strategic buyers step up their game.

“We’ve seen a pretty drastic difference between what we were able to pay for those businesses and what the public companies have paid in terms of multiples of rate base,” Jenkins said. “We’re basically buying at like 1.3x rate base, and they’re buying at 1.7x, 1.8x, 1.9x.”

One recent example is Spire’s acquisition of Piedmont Natural Gas, which closed in March for USD 2.4bn, representing 1.8x year-end 2024 rate base.

Despite the growing competition, BCP has spent several years building scale in the space. BCP was an early mover, looking at middle market regulated utilities opportunities as early as 2020.

Through Delta Utilities, which it set up in 2023, the firm has assembled a growing regulated utility platform through a series of acquisitions. In 2025, it acquired Entergy’s Louisiana and New Orleans gas distribution business for USD 484m and CenterPoint Energy’s three regulated natural gas distribution companies serving Louisiana and Mississippi for USD 1.2bn. Earlier this year, BCP acquired New Mexico Gas from Emera for USD 1.3bn and agreed to acquire Louisiana utility Cleco alongside Stonepeak for around USD 5.75bn.

Merger pressure

BCP expects the pace of utility divestitures to remain strong.

Listed players in the space are grappling with the need to invest billions of dollars into building generation, upgrading transmission systems, and accommodating data-center demand at a time when many are trying to avoid issuing new equity. Asset sales can help bridge that funding gap, Jenkins noted.

BCP’s thesis speaks to a broader shift across infrastructure investing. Rather than treating utilities as slow-growth defensive assets, financial sponsors increasingly view them as critical enablers of AI-driven economic expansion. BCG estimates the US may need 50 GW to 80 GW of additional generation capacity, equivalent to 24-38 Hoover Dams’ output, by 2030.

That is one reason BCP is watching large utility combinations closely. Major mergers can create pressure to divest overlapping or non-core assets.

Among the potential carve-out opportunities BCP is monitoring is the proposed USD 66.8bn merger between Dominion Energy and NextEra Energy, Jenkins said.

The attorneys general of Massachusetts, Connecticut, Maine, and Rhode Island and ratepayer advocates are urging the Federal Energy Regulatory Commission to reject the proposed merger, arguing it would create an energy behemoth with unprecedented market power. A group of 12 Democratic lawmakers is also asking the regulator to closely examine the deal and block it if it would increase consumers’ energy costs.

While BCP evaluates carve-out opportunities nationwide, it remains focused on the Midcontinent Independent System Operator (MISO), the regional grid operator serving parts of the Midwest and South, Jenkins said.

It favors regulated utilities, such as Cleco, that have signed the White House Ratepayer Protection Pledge, under which technology companies commit to paying their fair share of the energy infrastructure needed to support data centers, he said.

In May, Cleco confirmed it will supply power to a new 430-megawatt data center being developed by Applied Digital in Rapides Parish, Louisiana, under an arrangement that reimburses related infrastructure investments.

Services foundation

Utilities may represent one of BCP’s fastest-growing investment themes, but its core business remains investing in founder-owned and family-controlled infrastructure services companies.

In May, this news service reported that the firm was marketing its fourth vintage infrastructure services fund, BCP Fund IV, with a USD 1.5bn target. The previous vintage closed on USD 1.5bn, the report added. BCP Fund III closed in 2022.

BCP’s interest in the sector is rooted in a longstanding connection to power and infrastructure. Late co-founder Jim Bernhard founded The Shaw Group, which grew through roughly 30 acquisitions into one of the world’s largest engineering-construction firms. At one point, the company owned a 20% stake in Westinghouse Electric, said Jenkins, who spent 10 years at Shaw.

BCP prefers to invest in companies that it knows well, he said, citing the firm’s pending take-private acquisition of Bowman Consulting Group, an engineering services and program management firm, for an enterprise value of about USD 1bn. BCP built a relationship with founder and CEO Gary Bowman over the course of a decade, before agreeing to take it private.

The firm is particularly interested in companies serving utilities, such as TechServ, a Tyler, Texas-based company specializing in grid engineering, inspection, and oversight that the firm acquired last year

BCP also sees significant opportunity in water infrastructure. The firm views water as a secondary beneficiary of the same forces driving investment in power. Growing digital infrastructure requires not only electricity but also substantial water resources and related services, creating opportunities across operations, maintenance, engineering, and inspection.

“We think that a lot of the noise around what’s happening in digital infrastructure is actually creating opportunities on the water side,” Jenkins said.

This news service recently reported that water midstream companies, long tied to the oil and gas sector, are positioning themselves to serve data centers’ growing water demand.

BCP’s average holding period is between six and 10 years. “It’s really about how quickly we can get to what we believe scale is … where we’re building one great business,” the co-founder said, noting that the firm uses relatively low leverage on its acquisitions.

Most deals originate from BCP’s industry network, built through the co-founders’ time at Shaw and investments in more than 90 companies, Jenkins said.

Exit pipeline

While much of BCP’s current attention is on deployment, the firm is simultaneously monetizing older investments.

It has been busy exiting portfolio companies. In October 2025, it sold its stake in Brown & Root Industrial Services, a provider of non-discretionary, specialty industrial services that it established in 2015 alongside KBR. This year, it sold The Gray Casualty & Surety to Palomar Holdings for about USD 300m and United Utility Services to Sandbrook Capital and funds managed by Blackstone Credit & Insurance. It also expects to close the sale of EPIC Piping’s parent company to One Equity Partners this month.

BCP’s first infrastructure service fund is now fully exited, as previously reported. The firm has distributed about USD 2bn of proceeds to investors on approximately USD 1.2bn of invested capital.

Meanwhile, BCP is considering transferring at least one portfolio company from its second infrastructure services vintage into a continuation vehicle (CV), Jenkins said.

“There’s one that’s in an exciting marketplace that has a huge amount of growth and has a significant amount of growth still to come,” Jenkins said.