IFM unit buys majority of Warsaw heating provider for €359m

Dalkia Polska, in which the Australian investor holds a 40% stake, has bought 85% of Warsaw district heating operator SPEC. Warsaw's heating network is the largest in the European Union.

Dalkia Polska, 40 percent owned by Australian infrastructure investor IFM, has bought a majority stake in the city of Warsaw's municipal district heating provider, IFM has announced in a statement.

Dalkia Polska paid PLN1.44 billion (€359 million; $520m) for an 85 percent stake in Przedsiebiorstwo Stoleczne Energetyki Cieplnej (SPEC) and has pledged to invest a further PLN1 billion in the district heating network over the next seven years, the city authorities said. They added that Dalkia Polska pledged not to sell shares in SPEC for at least 10 years.

“The heating network in Warsaw is the largest in the European Union with more than 1,700 kilometres of pipelines. With a forecast of increasing demand for district heating as a result of population growth and increased urbanisation, IFM has a solid investment case which presents some significant upside potential for our investors,” Frederic Michel-Verdier, executive director for IFM in London, said in a statement.

Christian Seymour, IFM's head of infrastructure for Europe, said the investment provides IFM's institutional investors with greater exposure to a “regulated and growing energy sector”. He added: “Poland has shown resilience during the economic downturn by continuing its positive GDP [gross domestic product] growth.  Based on our analysis, we expect the country to outperform its peers in Central and Eastern Europe with a forecast GDP growth of 4 percent in the coming years.

Once the deal gets the necessary approvals from local and European authorities Dalkia Polska's market share in the Polish district heating sector will increase from 11 percent to 25 percent, serving three of Poland's four largest cities.

IFM said in a statement that it has been investing in infrastructure globally since 1995. It has completed over 40 deals and has more than $10 billion invested in infrastructure assets across Australia, Europe, the US and South America.