Flagship investor enters power market

Investors outside of Texas are betting the state’s competitive — and at times chaotic — electricity market will help bolster their bottom lines.

Gainline Capital Partners. a Connecticut-based investment firm, said Wednesday it purchased a majority interest in Flagship Power, a retail electricity provider operating in Texas. Houston-based holding company Utility Rescue launched Flagship Power in 2022 and will remain a significant shareholder in it, the companies said in a statement.

“It’s a partnership between a financial company and an operating company to make money for the financial company, and make the operating company bigger, faster, better,” Rob Cantrell, president of Utility Rescue, said. “On the Flagship and the Utility Rescue side, we get the benefit of the capital. And the financial partner, they’re looking to us to make them a bunch of money.”

Cantrell, who will remain on Flagship’s board, declined to say how many customers the company serves, but said it’s “adding thousands a week.” The companies also did not disclose the value of the deal, or exactly how much of an interest Gainline will have in Flagship.

Cantrell has been involved in the Texas retail electricity market since its current structure was set up, he said. In the late 1990s and early 2000s Texas lawmakers overhauled the electricity system, breaking it up into three parts: power generators who compete to sell electricity; transmission and distribution companies, such as CenterPoint, that own and operate poles and wires to deliver power to homes; and the retail market.

Retail electricity providers do not generate power, though some are owned by companies that do, nor do they own or operate the poles and wires to deliver electricity to customers. Instead, retail providers are tasked with selling electricity plans, billing customers and buying electricity

from power generators. Over the years Cantrell has helped launch multiple retail electricity brands in Texas, including Pulse Power which was sold to Shell Energy in 2021. He expected Flagship to attract private equity investment, but said it happened even faster than he anticipated.

Gainline has had an eye on Texas, said Zach Greenspan, a vice president at the investment firm, because of what he called the success of the state’s electricity market.

Gainline is a private equity firm that invests in businesses with revenues between $5 million and $50 million in revenue that don’t already have a private equity sponsor, according to Greenspan. He said Flagship’s management team would run the day-to-day operations, and characterized the deal as a partnership.

“We’re just the financial sponsor backing them to continue their growth,” he said.