German pensions, insurers close €1.3bn grid deal

Asset manager Commerz Real will run Amprion, the largest of four German transmission operators, on behalf of a consortium of insurance companies and pension funds, which acquired a 74.9% interest in the company from RWE in July.

A consortium of German institutional investors led by Commerz Real, the real estate arm of Germany’s Commerzbank, has completed the acquisition of a 74.9 percent stake in Amprion, the largest of four German transmission operators.

The transaction was agreed in July and has now received the necessary regulatory approvals. German utility RWE was the seller, divesting the stake for an enterprise value of €1.3 billion (as at January 1, 2011), which represents almost the entire regulated asset base of Amprion as recognised by the German regulator. The sale price is equivalent to around eight times Amprion’s recurrent earnings before interest, taxes, depreciation and amortisation.

At the time it was announced, the deal raised eyebrows in the industry because it was perceived that the institutional buyers – which include insurance companies Munich Re, ERGO, MEAG, Swisslife and Talanx as well as the Westfalen-Lippe doctors’ pension fund – would manage the asset directly.

That interpretation, however, missed Commerz Real’s role in the deal, which extends from broker to asset manager, running Amprion on a daily basis. A spokesman from Commerz Real told Infrastructure Investor

“Commerz Real will take care of the asset management as this is part of our core competencies. You can view this as a single-project, closed-end infrastructure fund, through which a couple of investors bought shares in this asset.”

But the deal is also indicative of infrastructure’s growing profile among institutional investors. 

“A study conducted by Commerz Real at the beginning of the year together with Steinbeis-Hochschule in Berlin has confirmed the interest of institutional investors in infrastructure as an asset class. We are accommodating this interest,” Erich Seeger, a board member at Commerz Real, explained in a statement, adding: “We are already conducting negotiations on additional infrastructure projects.”

The Commerz Real spokesman indicated that future deals might be similar in profile to Amprion. That’s something Seeger backs up in his statement: “Regulated infrastructure assets are of particular interest for institutional investors in the current capital market environment due to their stable cash flows and the fact that there is no correlation to other asset classes.”

RWE is retaining a 25.1 percent stake in Amprion and also has a temporary 10.8 percent stake in the consortium. Commerz Real’s 13 percent stake in the consortium is also temporary until it can “sell on the shareholding to further investors in the short term” according to an RWE statement announcing the deal. 

Amprion is the largest of Germany’s four power transmission network businesses, with around 11,000 kilometres of power lines.