Over €2.5 billion of natural gas assets up for sale across Germany, Spain and Portugal are currently capturing the attention of infrastructure investors.
Gas sales: big
The assets are said to have attracted expressions of interest from the likes of Antin Infrastructure, AXA Private Equity, Allianz, Goldman Sachs, Infracapital Partners, Macquarie and RREEF. But with some of these investors involved in more than one asset sale, upcoming second round bids are likely to have an effect on the other ongoing sales processes, a source familiar with the deals said.
“We are now coming to a point where teams will have to choose which projects to commit to,” the source explained. “For example, the bidding process for RWE is heavily slanted towards the regulatory framework, which is quite complex,” the source said.
“But the sale of Galp, which is in its very early stages, is very well suited to passive investors and some financial engineering. That’s because Galp’s gas assets have a regulated asset base (RAB) and a debt-to-RAB ratio of some 14 percent, creating space to increase their leverage,” he pointed out.
RWE’s gas distribution network has been the latest deal to reach the expression of interest stage, with the likes of Macquarie and RREEF thought to have submitted expressions of interest last week. The source also indicated that Infracapital Partners and a consortium of Allianz and one or two German municipal authorities were looking at the sale, but it is unclear if they ended up submitting expressions of interest for it.
The gas transmission network is thought to be worth between €300 million and €500 million and runs over 4,000 kilometres across the state of North-Rhine Westphalia, close to the border with the Netherlands. It generated over €200 million of revenue in 2009.
AXA Private Equity, Infracapital Partners and RREEF are thought to have submitted expressions of interest for two German gas storage facilities held by BEB Erdgas und Erdoel, a joint venture between Exxon Mobil and Royal Dutch Shell. Five candidates have gone forward to a second round of bidding, the source said, in a deal that could surpass €1 billion. UBS is running the sales process.
The oldest deal on the market is the sale of Endesa’s 4,100-kilometre Spanish gas distribution network, which is expected to receive binding bids on September 13. Antin Infrastructure, AXA, Goldman Sachs and Macquarie are thought to have expressed an initial interest in buying the asset in a deal that could be worth more than €700 million. Mediobanca and JP Morgan are said to be managing the sales process.
The least advanced sales process is Galp’s. The Portuguese firm has sent teasers for the sale of a 45 percent stake in its Portuguese gas business, but has yet to send an information memorandum to prospective buyers. Galp’s gas assets have a RAB of over €1 billion, so the sale of 45 percent could net the company some €500 million. Citi and Santander are advising Galp on the divestment process.