Utility company PG&E (NYSE:PCG) is in talks with global investment firm KKR (NYSE:KKR) to secure funding aimed at upgrading its infrastructure and preventing wildfires. Under the proposed deal, PG&E intends to sell a minority stake to KKR in its newly formed subsidiary, Pacific Generation.
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A Wall Street Journal report highlighted that PG&E aims to offload a 49.9% stake in Pacific Generation to KKR, potentially generating proceeds of around $2 billion to $3 billion.
PG&E Faces Challenges in Raising Capital
This move comes as PG&E faces challenges raising capital after a complex bankruptcy restructuring. It’s worth noting that PG&E filed for bankruptcy in 2019 due to wildfire liabilities.
Additionally, the company encounters constraints on raising funds without imposing additional burdens on its customers through increased rates. Yet, PG&E faces hurdles in implementing rate increases, as it has already executed a significant hike earlier this year. Consequently, it is exploring alternative financing options to support its capital investments.
Whether the company will get regulatory approval for the deal remains to be seen. Meanwhile, let’s look at the Street’s forecast for PCG stock.
Is PG&E Stock a Good Buy?
While PG&E faces challenges in raising capital, Wall Street is bullish about the stock. With nine Buys and two Holds, PG&E stock has a Strong Buy consensus rating.
PCG stock is down about 5% year-to-date. Analysts’ average price target on PCG stock is $19.68, which implies 15.02% upside potential from current levels.
