Goldman Sachs Buys Zilkha, Expanding Interest in Wind Power
By Simon Romero

Published: March 22, 2005

Goldman Sachs said yesterday that it was strengthening its investment in wind energy with the acquisition of Zilkha Renewable Energy, one of the nation's largest developers of wind projects. The deal comes after several similar transactions since the start of the year, signaling robust commercial interest in wind-powered electricity generation.

The companies did not disclose the price or terms of the acquisition, but the deal would give Goldman Sachs control of almost 4,000 megawatts of wind-energy projects under development in 12 states.

Goldman Sachs already has interests in wind farms in Wyoming, Oregon and California. A spokesman for Goldman Sachs said that it had not decided whether to rename Zilkha Renewable Energy, but that the company would continue operating from Houston.

Michael Zilkha and his father, Selim, the co-owners of Zilkha Renewable Energy, will maintain a minority stake in the wind venture, which was created after the men sold another company, an oil exploration firm called Zilkha Energy Company, for about $1 billion in 1998 to Sonat Energy. Since exchanging the oil business for wind projects, the Zilkhas have run a low-profile operation from their base in Houston.

"We realized that Goldman Sachs would be the best owner for this business," Michael Zilkha said in an interview, citing his company's growing recent investments in places like New York and Oklahoma, where the company is developing a combined 350 megawatts of projects. "This way we'll maintain our culture but piggyback off their complementary resources and talent."

Mr. Zilkha, 50, is an unusual figure in Houston's energy scene. Raised in London and educated at Oxford, he got his start in business in the late 1970's as owner of ZE Records, a New York music production company. After moving to Houston in 1986, he became known for using computerized geologic data on the Gulf of Mexico to search for offshore drilling locations.

Mr. Zilkha's sale of his company comes at a time of improving prospects for wind companies as several states, including California, Illinois and New Mexico, are seeking to increase the role of wind in electricity generation. Much of the interest in wind-generated electricity is related to high prices for natural gas in the United States, after a boom in gas-fired power plants in the 1990's resulted in tight supplies of the fuel. A spate of takeovers in the wind-energy business this year shows that large energy companies and investment banks are seeking to increase their holdings in wind power.

In January, PPM Energy, an American unit of ScottishPower based in Portland, Ore., said it was acquiring Atlantic Renewable Energy of Richmond, Va. Also in January, the AES Corporation of Arlington, Va., said it was buying SeaWest Holdings, based in San Diego, for $60 million in cash.