An unloved energy bet is set to become the most profitable private-equity deal ever

When private-equity firm Energy Capital Partners struck a $5.6 billion deal in 2017 to buy natural-gas power producer Calpine, it was a decidedly contrarian bet.

- Miriam Gottfried

The fracking boom and growing production of renewable power had led to a glut of cheap natural gas, squeezing margins at the Houston-based company.

Eight years later, Calpine is poised to become the most profitable private-equity deal of all time by dollar value. Including dividends, ECP and its co-investors will have earned more than $25 billion when the firm closes its deal to sell Calpine to Constellation Energy, expected in the next month, according to people familiar with the matter.

Around $18 billion of that will come in the form of Constellation stock, which ECP will have to sell over time to fully realize its investment. Still, shares of Constellation are up nearly 50% since the deal was announced in January, suggesting the windfall will easily surpass the $14-billion Blackstone made on its record-setting investment in Hilton Hotels.