Fundraising

Borealis, First State buy €2.55bn Finnish grid

Fortum, the country’s largest utility, is now looking to sell its Swedish and Norwegian distribution units.

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A consortium comprising Borealis Infrastructure and First State Investments has bought 100 percent of Fortum Corporation’s distribution business in Finland.

The Canadian investor and the Australian firm acquired the Fortum Distribution Finland (FDF) via Suomi Power Networks Oy, a company they own alongside institutional investors Finnish Local Government Pensions Institution (Keva) and LocalTapiola Pension.

Borealis and First State each hold a 40 percent stake in the business, while Keva and LocalTapiola respectively own 12.5 percent and 7.5 percent.

Fortum, Finland’s biggest utility, sold the unit for €2.55 billion on a debt and cash-free basis. The company will pocket a one-time sales gain of as much as €1.9 billion, it said in a statement.

With over 600,000 customers across the country, FDF owns the largest distribution network in Finland, commanding a market share of more than 20 percent. The company posted €321 million in sales and €154 million in EBITDA last year.

The transaction, still subject to regulatory clearance, is expected to close during the first quarter of 2014.

In an effort to further focus on power generation, Fortum today said it is now preparing for a possible sale of its Swedish and Norwegian electricity distribution businesses.

The deal is the first in Finland for Borealis, the infrastructure direct investment arm of Canadian pension Ontario Municipal Employees Retirement Scheme (OMERS). The firm focuses on investments in large-scale infrastructure with enterprise values of more than $1 billion.

FDF is the second Finnish acquisition by First State, following its purchase of TV and radio broadcaster tower business Digita last year. It will be funded by First State European Diversified Infrastructure Fund, which at end September 2013 had garnered A$1.8bn in commitments from investors.

Other assets owned by the fund include the UK’s Anglian Water Group and Electricity North West and Spanish regasification plant and transmission network Reganosa.