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Energia pays €200m dividend as US private equity owner plots sale

Group could fetch as much as €2.75bn if possible sale takes place

Energia Group has 309 megawatts of operating wind assets and deals to purchase power from third parties with 1.23 gigawatts of capacity. Photograph: iStock

Joe Brennan
Wed Mar 13 2024 - 06:00

Energia Group paid out €200 million in dividends in the nine months to the end of last year, as the electricity and gas utility’s majority owner, US private equity firm I Squared Capital, prepared the business for a fresh sale attempt.

New York-based I Squared is on the search for advisers to market the company, according to sources. Reuters reported last month that a sale process is expected to begin after the summer and could result in a deal valuing Energia at about €2.75 billion.

I Squared, founded a dozen years ago by former executives at Morgan Stanley’s infrastructure arm, acquired Energia — then known as Viridian Group — in 2016 from Bahrain’s Arcapita Bank for €1 billion. Arcapita had owned the company for almost a decade.

The US firm subsequently sold a minority stake in Energia to an unknown investor the following year and set up a holding company over the business in the Cayman Islands.

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I Squared made two unsuccessful efforts to sell the company before now, in 2018 and 2020.

The dividend disclosure was contained in Energia’s financial report for the first three quarters of its financial year to the end of March, published on the company’s website. The €200 million payout, including €50 million paid out days before Christmas, eclipses the €181 million of dividends distributed by Energia under the first six years under I Squared’s ownership.

Energia’s earnings before interest, tax, depreciation and amortisation (ebitda) jumped 27 per cent to €246.7 million for the nine months to the end of December from the same period in 2022, according to the financial report.

The group’s renewables business, which owns and operates 309 megawatts (MW) of wind assets and purchases electricity from 1.23 gigawatts (GW) of third-party green energy producers, saw its ebitda decline 52 per cent to €86 million as a result of lower energy prices and wind volumes.

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Earnings in Energia’s flexible electricity generation division, owner of two so-called combined cycle gas turbine plants in Huntstown in north county Dublin as well as a 50MW battery storage facility in Belfast, slumped 80 per cent to €32 million. This was mainly due to planned outages at the 747MW Huntstown plants early last year, lower utilisation of both facilities and a decline in power prices.

The flexible generation business is also progressing with the development of a proposed big data centre and 50MW emergency gas generation project at the Huntstown campus.

However, the customer solutions unit, which supplies electricity and gas to 300,700 customers in the Republic and 546,800 in Northern Ireland, swung to an ebitda profit of €128.7 million from a loss of €143.8 million as a result of higher margins. Earnings in this division had been squeezed over the two previous years by a sharp spike in wholesale power prices following Russia’s invasion of Ukraine.

Energia had a total debt of €876.4 million, including bonds and project finance facilities, at the end of December. However, its €385 million of cash and cash equivalents reduced net debt to €491.4 million.

“Commodity and wholesale electricity prices have stabilised in the nine months and while we continue to operate in an environment of higher interest rates and higher inflation, the group has been able to deliver robust financial performance,” the group said.

It is continuing to assess several wind and solar projects, as well as flexible generation, energy storage and so-called behind-the-meter initiatives, where it is looking to help big customers generate, store and even feed electricity back to the grid.

Representatives for Energia, which has about 1,120 employees, and I Squared did not respond to requests for comment on the planned sale.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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