Feb 13, 2024 - News

Deer Valley, Solitude operator Alterra raised $3 billion as ski industry stares down climate change

A resort surrounded by piles of snow.

Solitude Mountain Resort near Salt Lake City. Photo: Universal Images Group via Getty Images

The owner of Alterra Mountain Co., which operates Deer Valley and Solitude, just raised $3 billion in investments, which could mean more resort construction and property acquisitions.

Why it matters: The fundraising success shows the ski industry is seen as financially viable despite its vulnerability to climate change.

Driving the news: KSL Partners, the $21 billion private equity firm that is Alterra's majority owner, recently announced that it completed a $3 billion continuation fund for the resort operator, whose properties also include Palisades at Tahoe, Steamboat in Colorado and Sugarbush in Vermont.

Of note: KSL Partners is unrelated to the Salt Lake TV station.

Between the lines: Continuation funds let PE firms maintain a portfolio company investment for a longer period than it normally would, while giving limited partners the opportunity to either reinvest or exit.

  • In this case, KSL also brought in new investors.
  • Proceeds will be used to continue building out existing properties, including hotels and villages, plus possible property acquisitions, reported Axios Pro Rata's Dan Primack.

The big picture: KSL cofounder Eric Resnick says Alterra has managed to offset rising temperatures with advanced snowmaking technologies and the introduction of the multisite, season-long Ikon Pass.

  • The pass provides access to several Utah resorts.

What they're saying: "We're now able to make snow using less water, and at higher temperatures, and are able to move snow much more easily than we used to," Resnick said.

The intrigue: Most ski resorts now are effectively large luxury real estate markets, which tend to bring long investment timelines, writes Alan Neuhauser, author of Axios Pro: Climate Deals.

  • Many resorts also hold water rights — an increasingly valuable asset.

Context: While climate change may threaten skiing in the long run, the sport has exploded since the COVID-19 pandemic, data from the National Ski Area Association show.

Of note: Companies like Alterra have benefited from the closures of smaller, family-run ski resorts that can't afford expensive snowmaking equipment — although Resnick notes that those declines have slowed or even stopped.

  • Alterra recently announced plans to acquire Arapahoe Basin, Colorado's longtime holdout as an independent resort.

The bottom line: Private equity firms don't generally raise continuation funds for companies they expect to peter out soon.

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