US power company TXU yesterday embarked on a drive to promote its $45 billion (€34.1 billion) leveraged buyout led by Kohlberg Kravis Roberts (KKR) and Texas Pacific Group (TPG), amid mounting evidence that the private equity boom has entered a new, more highly politicised era.

Executives at the company said the deal would bring lower prices for consumers and stronger environmental policies, including a reduction in carbon emissions and more investment in renewable energy.

TXU has been the target of environmental groups, angered by the company's plans to construct 11 coal-fired plants to meet Texas's growing energy needs.

But in a sign of private equity's increasing awareness that acquiring big companies entails garnering the support of politicians and special interest groups as well as investors, KKR and TPG agreed to scrap plans to build eight of those coal plants.

The new owners also agreed to bring in James Baker, former US secretary of state; William Reilly, former Environmental Protection Agency administrator; and Donald Evans, former US commerce secretary, to help oversee the investment.

In an interview with the Financial Times, TXU chief executive John Wilder said he had proposed an "aggressive" stand-alone plan that included many of the moves that would be undertaken by TPG and KKR.

But he said the company's board concluded that his proposal was "inferior" to the buyout. "[ The buyers] bring a network of individuals and capabilities that a company like TXU couldn't construct on its own," Mr Wilder said. "We believe they will be a catalyst for innovation."

In leveraged buyouts, private equity groups typically aim to generate returns in excess of 20 per cent over a time frame of about five years. When TPG and KKR take over TXU, they will split it up into its three main business lines: retail, generation and transmission. Theoretically, the buyers will earn their return by selling each of the units or taking them public in several years.

TXU shareholders will receive $69.25 per share in the deal, representing approximately a 15 per cent premium over the company's Friday closing share price.

If completed, the deal would represent the largest leveraged buyout, exceeding this month's $38.9 billion takeover of Equity Office Properties by Blackstone.

- (Financial Times service)