Bord Gáis Energy set to be sold for €1.12bn

International consortium led by Centrica named as preferred bidder on energy company

Centrica and co-bidders Brookfield Renewable Power Inc and iCON Infrastructure have been selected as preferred bidders, Minister for Communications, Energy and Natural Resources Pat Rabbitte confirmed

Centrica and co-bidders Brookfield Renewable Power Inc and iCON Infrastructure have been selected as preferred bidders, Minister for Communications, Energy and Natural Resources Pat Rabbitte confirmed

Fri, Dec 13, 2013, 00:34

The Government has approved a preferred bidder for its sale of Bord Gáis Energy only two weeks after it announced all bids had been rejected because they had put too low a value on the State-owned energy provider.

Minister for Energy Pat Rabbitte last night confirmed that a consortium comprising Centrica, Brookfield Renewable Power and iCON Infrastructure had submitted a revised bid which was acceptable to him and Minister for Public Expenditure Brendan Howlin. The bid has placed an “enterprise value” of up to €1.12 billion on the company.

Opposition parties and interested groups, including trade unions, have said the value of the company is somewhat higher than that.

Preferred consortium
The State will retain ownership of the natural gas network, which transports gas around the State, as the Government believes that this is strategically important. Bord Gáis and the consortium will now begin negotiations finalising the sale terms. It is expected to be signed early next year.

A parallel process will involve Bord Gáis engaging with employees and unions over personnel and human resources aspects of the sale. There is also an employee share-ownership plan which will benefit from the sale. “We are pleased with this development, which has led to materially improved value being offered and the selection of a preferred bidder,” said Mr Rabbitte.

Job creation
Under the agreement with the troika, half the proceeds of the sale of any State assets will go towards job creation and stimulus with the remainder used to write down national debt.

Fianna Fáil energy spokesman Michael Moynihan accused the Government of cynical timing coinciding as it does with the exit from the bailout.

He said the Government was now meeting its financial targets and there was no need to sell the company. “The driving force here is simply Fine Gael ideology,” he said.

Sources claimed last night that Blackstone, which is understood to have come second in the renewed bidding process, came within less than €20 million of the winning bid. Blackstone is said to have undertaken not to break up Bord Gáis and to invest €500 million over coming years.

The sources said Bord Gáis could be broken up between three companies under this deal.




PROFILE: THE CONSORTIUM
Centrica
The British-based multi- national supplies gas and electricity to businesses and consumers in Britain through British Gas, which was state owned until the early 1990s. The company has around 13 million customers there between the two categories.

It also has a big home services business, maintaining water boilers and heating systems meaning that it and Bord Gáis Energy have a lot in common.

In the first six months of this year, it made profits of almost £1.4 billion from sales of £13.6 billion. It had around £800m in cash at the end of June.

It operates similar businesses in the US and Canada, once again focused on gas and electricity sales and home services. These activities are backed up by power generation, energy trading and some oil and gas exploration and production. It has oil field interests in the North Sea and Caribbean.


Brookfield Renewables
The Canadian-based stock-market-traded firm specialises in investing in renewable energy suppliers and developers. In the first nine months of this year its investments earned a return of $936m from revenues of just over $1.3 billion.

Its biggest business is hydroelectric electricity generation in Canada, Brazil and the US. That is followed by wind power in North America. In all, its operations have the capacity to generate around 4,400 giga watts of electricity, around 800 times peak demand in the Republic.

Brookfield’s primary interest in Bord Gáis Energy is understood to be the fact that it is one of the biggest wind farm developers in Ireland, thanks to its takeover of the SWS renewables business.


Icon Infrastructure
An investment firm which focuses on infrastructure. Its interests include a Spanish oil pipeline operator, CLH, The Porterbrook Partnership, which leases passenger trains to British railway companies, Sutton and East Surrey Water in England, and a cargo terminal operator in Mexico.

One of its more significant interests is Mountaineer Gas, a natural gas distribution business in the US that supplies around 220,000 in West Virginia. It was suggested yesterday that Icon is interested in Bord Gáis’s northern Irish operation, Firmus.

According to its website, Icon’s assets in Europe and North American are worth more than €2.5 billion while it has responsibility for managing more than €1 billion of its investors cash.

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