EQT Infrastructure buys Swedegas

EQT Infrastructure – Swedish investment group EQT’s infrastructure fund – has seen off bid rival Infracapital Partners to acquire Swedish gas utility Swedegas for a reported €200 million.
 

Swedegas: EQT's third investment

Swedegas operates a 390-kilometre gas network in the south and west of Sweden including the only interconnection between Sweden and Denmark and the extended European gas network. The sale will reach financial close in the first quarter of 2010 and will be funded with debt and equity. Nordea Corporate Finance was EQT’s financial advisor with Vinge acting as legal advisor. RBS advised Swedgas’ shareholders.
 
The sale initially attracted strong interest, with the likes of Antin Infrastructure Partners, Industry Fund Management’s international infrastructure fund, RREEF and a consortium of international pension funds all said to have submitted initial offers. But that number dwindled down to just two final bidders as volume and regulatory risk took their toll on the deal. 
 
Swedegas’ pipeline is only using 50 percent of its capacity, which led many investors to doubt if they would be able to get a good return on their investment. The lack of a finished regulatory framework – it will only be completed in October 2010 – added further uncertainty, with potential buyers unsure whether they would be in a position to raise tariffs enough to make the deal viable.
 
Swedegas, which generated revenues of €21 million last year, was owned by Germany’s E.ON Ruhrgas International (29.6 percent), Norway's Statoil (29.6 percent), Denmark's DONG Energy (20.4 percent) and Finland's Fortum Heat and Gas (20.4 percent).

EQT Infrastructure launched in 2008 with capital commitments of €1.2 billion. In addition to Swedegas, the fund has bought a Danish waste-to-energy company and a power plant in the US.