Lighting the way into the Republic’s energy market
Gas and electricity supplier Energia plans to enter the Republic this autumn, as a fourth supplier. So what can consumers expect?
Ian Thom, chief executive of Viridian: “We will want to be competitive against the market. You have got be price competitive, otherwise you won’t get off first base.”
Irish energy group Viridian has an indirect connection with an offbeat bit of legal history. A month ago, part of its biggest shareholder, Bahrain-based Arcapita, successfully emerged from chapter 11 bankruptcy in the US, a corporate rescue process that is akin to examinership in the Republic.
The deal that was agreed with creditors complied with Sharia law, which forbids usury (the charging of interest), and was the first of its kind approved by the US courts.
As it happens, the move had little impact on the Irish company which, according to chief executive Ian Thom, is entirely self-funding.
Arcapita acquired the business seven years ago, but has since syndicated it widely and is now a minority shareholder.
“Our existing investors have been around since 2006 and last year made a significant reinvestment: $120 million,” he says.
“They have always supported us through all the investments that we have done. There’s always been a long history of confidence in Viridian as an organisation and Ireland as a location.”
Part of the chapter 11 deal involved a pledge to dispose of assets in a structured way over time, rather than in a fire sale. It has always been understood that Arcapita would eventually sell the Irish business.
Thom argues that any private organisation is going to have changes in shareholders over time. “But underlying all that is Viridian, which remains a very long-term, committed participant in the Irish energy market,” he stresses.
Thom came to his job at the helm of the energy group via a slightly roundabout route. A Cambridge graduate, he originally qualified as a barrister. After practising for a few years he joined Moy Park – the Craigavon-based home of Irish chicken – as in-house counsel.
That role became head of European legal for US group OSI International when it took over Moy Park. From there, he joined Viridian 13 years ago as company secretary and general counsel, but with a strong commercial brief.
He then took on responsibility for some of its regulated businesses before taking over as chief executive following the sale of its Northern Ireland electricity network to ESB in 2011.
The group he now runs consists of two main divisions. One of them is Power NI, which supplies electricity to 650,000 residential customers and 35,000 businesses in Northern Ireland.
The second, Energia, owns two power plants in Dublin with a total capacity of 747 mega watts (MW) and has agreements to take electricity from wind farms with a total capacity of almost 600MW, around 25 per cent of renewable generation, in the Republic.
Energia has built a solid position in power supply, with more than a third of the small business market and 20 per cent of large energy users – mainly big companies, hospitals and manufacturers – in the Republic, where it also provides the power for all street lights.
Revenues are €2 billion a year and earnings before tax and write-offs come to €120 million. The group plans to grow by increasing both its own renewable generation capacity and through further deals with independent suppliers.
It has also been named as a possible suitor for Bord Gáis Energy, the State company’s natural gas and electricity supply division, which is on the block with a possible price tag of €1 billion.
Thom agrees that such a deal would be a “compelling strategic proposition” given the fact that the two appear to complement one another.