IFM blocked from Poland after government objections

The Australian firm’s bid to buy 1.4GW of cogeneration plants from EDF was scuppered following government opposition to private fund investment.

A deal that would have seen Australian fund manager IFM acquire about 1.4GW of cogeneration assets from EDF in Poland has been scrapped following opposition from Poland’s governing Law and Justice party.

EDF confirmed cancellation of the transaction last week after it appealed the government’s decision to block the deal last month, which it said “precludes it from exercising its legitimate rights as a shareholder”.

IFM had not responded to a request for comment at press time.

The two parties first entered exclusive negotiations for the eight coal and gas-fired cogeneration plants, as well as a group of district heating networks totalling 1.4GW of capacity, in October last year. The deal needed the green light from Polish authorities following legislation in August adding EDF Poland’s facilities to a list of companies requiring government approval to sell assets.

The transaction then attracted the ire of Energy Minister Krzysztof Tchórzewski, who objected to seeing domestic energy assets land in the hands of an investment fund.

“The fund is focused on aggressive profit,” he told local press last year. “In this case we are unable to welcome an investor with a focus on profit. We would be interested in investor with 10-year investment horizon which will enable us to modernise the power plants. We certainly wouldn’t be interested in an investor who would exploit the assets and exit investments.”

EDF is now said to be in talks with several state-owned Polish energy firms in an effort to restart the sale process.

IFM retains a small interest in Polish infrastructure with its 34 percent stake in waste company Veolia’s Polish subsidiary, for which it paid €70 million in 2006.

The firm, which is owned by 29 Australian pension funds, acquired a 50.4 percent stake in the 99-year lease of Ausgrid last year for A$16.2 billion ($12.4 billion; €11.3 billion) after bids by China’s State Grid and Cheung Kong Infrastructure were blocked by the New South Wales government on national security grounds.