Viridian’s New York owner plots sale after two years

I-Squared Capital purchased Northern Irish power firm in 2016 for €1 billion

 The Huntstown gas power station, a unit of Viridian Group, in Huntstown near Dublin.  Photograph: Aidan Crawley/Bloomberg via Getty Images

The Huntstown gas power station, a unit of Viridian Group, in Huntstown near Dublin. Photograph: Aidan Crawley/Bloomberg via Getty Images

 

The value of bonds in Viridian edged higher on Friday as it emerged that the Northern Ireland power company’s US owner, I-Squared Capital, is considering selling on the business two years after acquiring it in a €1 billion deal.

The Irish Times understands that two Asian funds that bought about a 20 per cent stake in Viridian from I-Squared last year would also have to sell their interest in the event the controlling shareholder pressing ahead with a disposal. It is believed that investment bank Evercore is advising I-Squared on the matter.

Bloomberg first reported on Friday that I-Squared was weighing a sale of the owner of electricity and gas supplier Energia and Power NI, which would mark its third change in ownership in less than a decade and a half.

I-Squared, founded in 2012 by former executives from Wall Street investment bank Morgan Stanley’s infrastructure arm and which has $13 billion (€11.3 billion) of assets under management, said two years ago as it bought Viridian from Bahrain’s Arcapita Bank that it planned to use the business as a platform to buy other businesses in Ireland and the UK.

Shake-up

Viridian was forced to take a £124.2 million (€140 million) exceptional charge in the year to last March after the company warned it would have to close its two Huntstown power plants in Co Dublin, as one of the facilities failed to secure a contract in a capacity payments auction ahead of a shake-up of the electricity market that takes effect next month. The writedown pushed it a full-year net loss of £86.8 million (€97 million).

The auction was run by national grid operator Eirgrid and overseen by the Commission for Regulation of Utilities (CRU).

However, a Government-established appeals panel found in July that the Huntstown facility was needed to ensure security of power supplies to Dublin and that the CRU made a “serious and significant” error in changing the terms of the plant’s licence.

Unsuccessful

Fitch, the ratings agency, affirmed its credit rating on Viridian at “B+” last month on the assumption that the Huntstown facilities are awarded transmission reserve contracts by the start of the new Integrated Single Electricity Market (I-SEM) October.

Market sources said it is unlikely that I-Squared will officially launch a sales process until the matter is clarified. A spokesman for Viridian decline to comment while effort to secure comment from I-Squared were unsuccessful.

Viridian’s sterling-denominated bonds that are due to be redeemed in 2024 rose by 0.7 per cent on Friday to 95.1c on the pound.

I-Squared said on Tuesday that it had raised $7 billion (€6 billion) for its second infrastructure fund and that it is targeting opportunities “including energy, telecom, transport and utilities in the US and Europe as well as in high-growth economies including India, China and Latin America”.