AXA PE to invest third of current fund

French fund manager AXA Private Equity will spend €330m to acquire a 23.48% stake in Luxembourg utility Enovos from ArcelorMittal. The investment comes from its third infrastructure fund, which is currently being raised and had collected around €900m by the end of April.

AXA Private Equity (AXA PE), the Paris-based private equity firm, has announced that it will acquire a 23.48 percent stake in Enovos, the Luxembourg-headquartered utility, from global steel company ArcelorMittal.

The €330 million investment represents a major commitment from AXA PE’s third infrastructure fund, which is in the market and had raised around €900 million by the end of April this year on its way to a €1.5 billion final target. The fundraising recently resumed in earnest after having been slowed by talks relating to the spinout of AXA PE, which are now thought close to resolution.

Enovos is an integrated utility company focused on electricity and gas transmission and supply, as well as power generation including renewables. Its core activities are in its Luxembourg base and Germany. AXA PE will become the second-largest shareholder in the company after the State of Luxembourg.

A press release from AXA PE said that Enovos had a “leading domestic position with strong growth potential to expand in other surrounding markets”. Since being formed just three years ago, the business has consolidated the majority of gas and power grids in Luxembourg and is the main supplier of gas and electricity in the country.

“This transaction is a major milestone in our strategy of growth in the Eurozone’s energy sector, provides geographic diversification  of our portfolio into Luxembourg and Germany, and demonstrates the continued ability of our team to originate proprietary deal flow for our investors,” said AXA PE head of infrastructure Mathias Burghardt in the press release.

Enovos has over 1,300 employees, more than 280,000 points of elecricity and natural gas delivery, around 9,500 kilometres of electric lines and 3,500 kilometres of gas pipelines. In 2010, it had a turnover of €1.5 billion.

AXA PE was given financial advice on the deal by BNP Paribas and legal advice by Clifford Chance. Equivalent roles on behalf of ArcelorMittal were performed by Goetz & Partners and Cleary Gottlieb Steen and Hamilton respectively.  

Towards the end of April this year, Infrastructure Investor revealed exclusively that AXA PE had resumed fundraising for its third infrastructure fund after talks over the business’s future had slowed momentum. The fundraising was nearing €900 million at that point, having reached €750 million by the end of September 2011. 

Spinout talks are thought to be close to being finalised with a structure that will see employees and top management retaining a significant stake in the business. Parent AXA Group is expected to keep a stake alongside new shareholders like Canada’s Caisse de Dépot et Placement du Québec and Singapore sovereign fund GIC. An important part of the spin-out deal is AXA Group’s commitment to continue to invest significant amounts in AXA PE’s family of funds over the next seven years or so.