New York-based investment firm I Squared Capital has pressed the start button on the long-awaited multibillion euro sale of its Irish electricity and gas utility Energia, nine years after it bought the business, say sources.
Investment bankers from Morgan Stanley, Barclays and Santander, who were hired a year ago to advise on sale strategy, have begun calling potential interested parties, said the sources, who declined to be identified.
It is anticipated that an initial round of non-binding bids will be called by early June. An enterprise value of €2.75 billion, including debt, had been put on the business a year ago when it emerged that I Squared was preparing a third attempt to sell it.
A spokesman for Energia, which is led by chief executive Ian Thom, declined to comment.
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The decision to start the process comes within days of An Bord Pleanála giving Energia permission to build a data centre in Huntstown, Co Dublin, in partnership with tech giant Microsoft. It also comes as Energia enters the final days of its financial year to the end of March.
I Squared, founded 13 years ago by former executives at Morgan Stanley’s infrastructure arm, acquired Energia – then known as Viridian Group – in 2016 from Bahrain’s Arcapita Bank for €1 billion. Arcapita had owned the company for almost a decade.
The US firm subsequently sold a minority stake in Energia to an unknown investor the following year and set up a holding company over the business in the Cayman Islands.
I Squared made two unsuccessful efforts to sell the company before now, in 2018 and 2020.
UK-based Octopus Energy is teaming up with Canada Pension Plan Investment Board to consider a bid for Energia, industry publication PeakLoad reported in recent days.
Other potential bidders include investment giants KKR, BlackRock and Brookfield and utility groups Centrica and SSE, say sources.
Energia reported earlier this month that its earnings before interest, tax, depreciation and amortisation (Ebitda) dipped to €238.3 million for the nine months to the end of December from €246.7 million for the same period in the previous fiscal year.
The three parts of Energia’s business – renewable energy, a flexible electricity generation business, and a unit supplying customers – have proven to be complementary in recent years despite upheaval across energy markets.
Ebitda in its renewables business, which owns 358 megawatts (MW) of wind assets and purchases electricity from 1.19 gigawatts (GW) of third-party green energy producers, and customer solutions unit, which supplies 866,700 homes and businesses on the island of Ireland, declined over the nine months amid lower energy prices.
However, earnings in its flexible generation unit, mainly made up of two combined cycle gas turbine plants in Huntstown with a total capacity of 747MW, advanced. This was fuelled by greater use of the plants – used to plug gaps in electricity supplies in the Greater Dublin Area – during the period as well as the opening earlier this year of an emergency 50MW gas-fired electricity plant on the Huntstown site.
The approval of the data centre will give investment banks marketing Energia a fresh angle to pitch the company’s growth opportunities to potential suitors. Energia also has a solar energy pipeline of more than 1,200MW.
