Duo to acquire E.ON units for €2.5bn

A joint venture between Macquarie and Kuwait’s Wren House has bought the German utility’s Iberian businesses, with the Australian fund manager set to own a majority stake in the assets.

Macquarie Infrastructure and Real Assets (MIRA) and Wren House Infrastructure, a subsidiary of Kuwait Investment Authority, have teamed up to buy 100 percent of E.ON’s Spanish and Portuguese integrated electricity businesses.

The Australian manager and the sovereign wealth fund’s unit have paid €2.5 billion for the assets – a figure that includes balance sheet adjustments, according to a source with knowledge of the transaction.

Macquarie will own a majority stake in the businesses following closing, E.ON said in a statement, with reports stating that the Australian fund manager’s shareholding in the assets would amount to 60 percent. Completion of the acquisition, still subject to regulatory approval, is expected by the first quarter of 2015, Macquarie said.

The firm declined to comment further on transaction terms, while Wren House couldn’t be reached before press time.

E.ON operates in Spain and Portugal as an integrated power business, comprising a network of 32,000 kilometres, a portfolio of around 4.0 gigawatts of conventional and renewable assets, and electricity and gas supply contracts with 650,000 liberalised and regulated customers.

“We are delighted to be investing in this diverse and high quality portfolio of energy assets, at a time where greater certainty has been provided for the regulatory regime and economic prospects are improving,” said Edward Beckley, European head of MIRA, in a statement.

Macquarie will fund the investment via Macquarie European Infrastructure Fund 4, a 2013 vintage that reached its final close on €2.5 billion. The transaction, which is the vehicle’s sixth, follows its earlier energy investments in Italian and French renewables business Sorgenia Green, German gas transmission company Open Grid Europe and former RWE unit Czech gas Networks.

The acquisition, by contrast, is one of the first sealed by Wren House. The institution was created in 2013 as the global direct infrastructure investment vehicle of the Kuwait Investment Office, KIA’s London base and its only one outside Kuwait. It said in June last year that it was looking to deploy as much as $5 billion over the coming three to five years in infrastructure assets, mostly in the UK.

“The acquisition perfectly fits [our] portfolio investment objectives and its long-term focused partnership investment model,” Wren House commented in a statement.