Canadian pension manager Caisse de depot et placement du Quebec (Caisse) has spent €210 million doubling its stake in Belgian gas company Fluxys, just as the latter announced the acquisition of two key European gas pipelines serving Germany, Switzerland and Italy, Caisse announced yesterday.
Caisse now owns 20 percent of Fluxys and said “the capital increase is intended to support Fluxys’ investment programme, including the acquisition of interests of Eni, an Italian company active in the energy sector, in TENP (Germany) and Transitgas (Switzerland) pipelines”.
The Trans Europa Naturgas Pipeline (TENP) transports gas from the German-Dutch border to the German-Swiss frontier, where it connects with Transitgas, which ferrets gas across Switzerland to connect with the network of Italy’s Snam Rete Gas, another utility. Eni sold 46 percent of Transitgas and 49 percent of TENP to Fluxys for €798 million and €60 million respectively, with the deals expected to close later this year.
Transitgas and TENP generated interest among the infrastructure fund community, but the assets’ dysfunctional regulatory profile – the assets are effectively one big pipeline with one half located in Germany, a highly regulated market, and the other half based in Switzerland, which has no regulation – frustrated many investors.
The acquisitions, which still have to get clearance from the European Union, have turned Fluxys into a European gas transportation powerhouse, something Normand Provost, executive vice president for private equity and chief operations officer at Caisse, recognised in a statement:
“Fluxys stands as a leader in its market, which corresponds perfectly to our goals of achieving stable and predictable long-term returns. The acquisition of interests in TENP and Transitgas contributes to increasing its foothold in north-western Europe. With its management team’s experience and positive track record, Fluxys builds on solid ground and offers a good long-term outlook for our depositors.”
Earlier this year, Caisse bought 10 percent of Fluxys for €150 million via a capital increase. Last December, the Canadian pension agreed to acquire a 36.7 percent stake in UK water company South East Water from Australian fund manager Hastings Funds Management for A$206 million (€151 million; $208 million).
At the end of last year, Caisse held C$151.7 billion (€109 billion; $147.9 billion) in net assets.