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Macquarie, ADIA buy German gas network for €3.2bn

A consortium led by Macquarie Infrastructure and Real Assets and including British Columbia Investment Management, ADIA and MEAG has bought some 12,000km of gas pipelines, known as Open Grid Europe, from German utility E.ON.

Macquarie Infrastructure and Real Assets (MIRA) has spearheaded a team of investors which have acquired a major network of gas pipelines, located in Germany, from German utility E.ON for €3.2 billion.

The consortium – comprising Macquarie European Infrastructure Fund 4, British Columbia Investment Management, Infinity Investments (a subsidiary of the Abu Dhabi Investment Corporation) and MEAG (the asset management arm of insurers Munich Re and ERGO) – has bought some 12,000 kilometres of gas pipelines and 27 compressor stations.

The network, known as Open Grid Europe, is Germany’s “longest regulated supra-regional gas transmission network” and accounts for around 70 percent of the country’s national shipping volume, serving 450 German and international customers, MIRA said in a statement.

According to Dow Jones, some 70 percent of the purchase price, or €2.25 billion, will be financed with debt – €1 billion of which is expected to come from the bond markets. A club of 10 banks including BNP Paribas, Credit Agricole, Commerzbank, Export Development Bank of Canada, ING, Royal Bank of Canada, Societe Generale, Scotiabank and Unicredit are also reportedly backing the deal.

The Macquarie-led team is said to have beaten competition from consortia led by France’s GDF Suez, Germany’s Allianz (also including the Canada Pension Plan Investment Board) and Belgium’s Fluxys.

“[Open Grid Europe] is a well-managed, high quality core infrastructure business operating in a stable regulatory environment,” commented Edward Beckley, MIRA’s European head. “It is a strong fit for the responsible, long-term investment objectives of the consortium,” he added. 

MIRA said in a statement that completion of the deal – earmarked for the third quarter of the year – is subject to the usual regulatory approvals. Macquarie Capital and Royal Bank of Canada were the consortium’s financial advisors.

The sale of Open Grid Europe is the latest in E.ON's plan to generate some €15 billion through asset sales by the end of 2013 to cut debt. It has so far netted some €12 billion in asset sales.