EDF prepares to auction its UK network arm
August 17, 2009
Tags: Business
As recently reported in the Times:
An international cast of billionaires, pension funds and utility groups is lining up to bid for the biggest electricity distribution network in Britain, worth more than £4 billion.
The French nuclear giant EDF recently appointed Deutsche Bank and Barclays to prepare for auction its UK network arm, which supplies nearly 8m homes in east and southeast England.
The proposed sale is part of the French group’s effort to reduce a €24.5 billion (£21.2 billion) debt pile built up after buying British Energy, Britain’s nuclear monopoly.
EDF is not expected to start the auction until the middle of next month, once executives in France have returned from summer holidays, but in recent weeks, potential bidders have stepped up talks to form consortia.
They include Abu Dhabi Investment Authority (ADIA), the Middle East sovereign wealth fund; Cheung Kong Infrastructure, the group owned by Li Ka-shing, Asia’s richest man; and three Canadian pension funds: Borealis, Ontario Teachers, and Canadian Pension Plan. Utility company Scottish & Southern, network monopoly National Grid, investment group GIP and Morgan Stanley Infrastructure are also holding talks.
None of the potential suitors has yet agreed to team up. “Everyone is talking to everyone but nobody has got together yet,” said a banking source, adding: “It would be very difficult for anyone to do this alone.”
The deal would require cash financing of up to £1.4 billion. Barclays is standing by to provide the debt.
The business, comprised of three regional networks in London, the east and southeast, is likely to be sold as a whole.
The sale has caused ructions within EDF. Vincent de Rivaz, chief executive in the UK, is said to oppose the move as the business is highly profitable.
• Veolia Environment has whittled down bidders for a £500m stake in its UK water arm. The French firm is selling 49% of the business. Blackstone, Goldman Sachs Infrastructure, and Marubeni and Mitsui of Japan have made it through to the second round.