Naturgy puts Irish energy supply unit on market

Spanish utilities giant moves to spin off asset just five years after acquiring the business

Naturgy supplies natural gas to almost 20 per cent of the industrial and commercial market in Ireland, according to its website. It is also a supplier of 100 per cent renewable electricity. File photograph: iStock

Naturgy supplies natural gas to almost 20 per cent of the industrial and commercial market in Ireland, according to its website. It is also a supplier of 100 per cent renewable electricity. File photograph: iStock

 

Spanish utilities giant Naturgy Energy Group has put its Irish commercial gas and electricity supply unit up for sale, five years after acquiring the business, according to industry sources.

Naturgy, then known as Gas Natural Fenosa, bought Dublin-based Vayu Energy in 2016 from Swiss commodities group Glencore and the company’s then managing director Colm Kennedy for an undisclosed sum at the time. The Spanish group’s annual report for the year subsequently disclosed that the deal was worth €32 million.

Vayu was renamed as Naturgy Ireland in 2018 as part of a rebranding of the wider group.

Naturgy has hired Deloitte in Spain to manage the sale, coming at a time when European wholesale gas prices have spiked to record highs this summer, with a knock-on effect on electricity prices.

Gas price inflation has been fuelled by a variety of factors, including a rundown in storage stocks after a cold winter, rebounding economic activity from the worst of the Covid-19 crisis, and supply outages. Energy suppliers are beginning to pass on increases to customers.

Data published by the International Energy Agency last week showed European gas consumption rose by an estimated 25 per cent in the second quarter of 2021, its largest year-on-year quarterly increase since at least 1985.

Initial teaser documents circulated by Deloitte recently to potential interested parties – which did not name the seller or the business being marketed – highlighting that the business has 250 industrial and commercial clients and delivered a €11.7 million gross profit on €112.7 million of revenues last year.

Sources have confirmed to The Irish Times that the sale relates to Naturgy’s Irish energy supply business. Representatives for Naturgy Energy Group, the Irish unit and Deloitte in Spain declined to comment.

Book of clients

Vayu, which was founded in 2003, reported gross profit of €6.7 million on €108.7 million of revenue in 2015, before it was acquired by its current owner.

It is not clear whether the sale will also include Dublin-based Naturgy Limited’s sometimes highly profitable liquefied natural gas trading subsidiaries in Ireland and Singapore, which paid €160.1 million of dividends in 2019, according to filings with the Companies Registration Office. This served to push Naturgy Limited’s net profit to almost €168 million for the year, up from €9.49 million in 2018.

Naturgy Ireland’s roll call of customers includes Eir, Bulmers, DAA, Irish Rail and Virgin Media. The company supplies natural gas to almost 20 per cent of the industrial and commercial market in Ireland, according to its website. It is also a supplier of 100 per cent renewable electricity.

The Madrid-listed Naturgy Energy Group has a market value of €21.4 billion and operates in more than 30 countries around the world, serving more than 23 million customers.

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