Analysis: Taken at face value Arcapita's acquisition of Viridian will do little to change the landscape of the Irish electricity market.
Not only are the Bahraini investors pledging to keep the Northern Irish electricity company as it is, but their track record with other such investments, in particular South Staffordshire in the UK, provides some evidence that there may be truth in what they are saying. Initial fears that any such bid from a financial institution would lead to the break up of Viridian seem - at least initially - to be unfounded.
Asim Zafar, an executive director of Arcapita, is insistent that Viridian will remain as it is.
Arcapita operates out of Bahrain, Atlanta and London, though it is continually on the hunt for acquisitions all around the world. While it's new to Ireland, it isn't new to the area of utilities, and it's likely that its 2004 acquisition of South Staffordshire will be used as a template for operations in the North. Since the takeover, the UK utility has seen its pretax profits rise 15 per cent.
Arcapita, meanwhile, isn't the only one to believe its Irish debut won't alter the set up of Viridian or the Irish electricity market. There is a consensus among analysts that the market will remain pretty much unchanged, though some cost-cutting may be introduced at Viridian. "The overall direction of the business won't change that much and it's unlikely to have much impact as far as the all-island electricity market is concerned," said one Dublin analyst.
There is another fact on which both the acquirer and analysts agree, and that's that the new ownership could help increase energy production and, in the long run, competition. With assets of more than $2.1 billion (€1.7 billion), there's no doubt the new owners have the financial clout to drive through more extensive expansion plans.
In addition, there is a feeling that if Arcapita hadn't got in there now, then someone else would. "It's a reflection of the current race to buy infrastructure assets," said one Dublin analyst, adding that if you're going to be bought by anyone, then it's better to be someone with at least some experience in the industry.
Earlier this week, a private equity group bid £2.2 billion (€3.3 billion) for water firm AWG, while South East Water changed hands for £665 million. So while the Republic's incumbent, ESB, may have expressed concern about a purely financial bidder acquiring Viridian, it could in the end work out to the market's advantage.
