Energia Group, the electricity and gas utility controlled by New York private equity firm I Squared Capital, handed a further €40 million of dividends to its owners in April, weeks after they pressed the start button on a sale of the business.
The payment, disclosed in Energia’s financial accounts for the year to March, brings total distributions to more than €540 million since the US firm bought Energia, then known as Viridian, in 2016 for €1 billion.
Sources said earlier this month that I Squared received several first-round bids in advance of a deadline on May 30th. Interested parties included Itochu Corporation, a Japanese trading company that is involved in businesses spanning textiles to energy and chemicals, US private equity giant KKR, and the Canada Pension Plan Investment Board.
Australian financial services group Macquarie is also among the companies that have been circling the business, which is expected to achieve an enterprise value of about €2.75 billion, according to the sources.
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Energia’s underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell almost 14 per cent to €323.5 million in its latest financial year, according to its latest report. Earnings advances across its renewable energy and flexibility power generation divisions offset by a decline in its customer sales business, where margins tightened.
The three parts of Energia’s business – renewable energy, a flexible electricity generation business and a unit supplying customers – have proven to be broadly complementary in recent years despite upheaval across energy markets.
When earnings jumped across the group’s renewables and flexible generation businesses in the two years to March 2023 – amid soaring electricity prices globally following Russia’s invasion of Ukraine – its business supplying customers suffered large losses, with margins squeezed by heightened wholesale prices. The consumer solutions business delivers a large profit in the year to March 2024 as earnings across the other two units declined.
Ebitda in the renewables business, which owns 358 megawatts (MW) of wind assets and purchases electricity from 1.19 gigawatts (GW) of third-party green energy producers, rose 8.5 per cent to €121.4 million in its latest financial year. This was driven by the commissioning of a new wind farm and higher wholesale energy prices.
The flexible generation division, mainly made up of two combined cycle gas turbine plants in Huntstown in north Co Dublin with a total capacity of 747MW, posted a 67 per cent surge in Ebitda to €93.5 million. This was fuelled by greater utilisation and prices achieved by the plants – used to plug gaps in electricity supplies in the Greater Dublin Area – during the period.
Earnings in the customer solutions business – which supplies electricity and gas to more than 880,7000 households and businesses on the island – declined by 48 per cent to €10.86 million as its margins contracted.
“Energia Group is well positioned for further growth as we work to meet the increasing demand for renewable energy on the island of Ireland,” chief executive Ian Thom said. “Our leading market position and extensive project pipeline put us at the forefront of Ireland’s energy transition, developing the infrastructure necessary to meet climate goals while ensuring secure and reliable energy, and supporting our customers on this journey.”
An Bord Pleanála gave Energia permission in March to build a data centre in Huntstown, Co Dublin, in partnership with tech giant Microsoft, adding to the investment case for potential suitors. Energia also has a solar energy pipeline of more than 1,200MW.
