DEDDIE sale preliminary deadline near, China’s SGCC out of contention

Prominent US funds such as Blackrock and KKR, European funds, including Ardian, as well as distribution network operators, primarily from Europe’s south, and central Europe, are among 19 likely participants, to date, in power utility PPC’s sale of a 49 percent stake in subsidiary DEDDIE/HEDNO, the distribution network operator.

An approaching expression-of-interest deadline set by PPC expires on January 29. In the lead-up, some 70 possible investors have been approached by three consultants, Goldman Sachs, Eurobank and Grant Thornton, commissioned by the power utility for the DEDDIE/HEDNO sale.

State Grid Corporation of China (SGCC) cannot take part in the sale as its strategic partnership with Greek power grid operator IPTO, in which the Chinese company holds a 24 percent stake, would represent a breach of conflicting-interest rules.

SGCC recently made clear an interest to further develop its presence in the Greek electricity market by either increasing its IPTO stake or pursuing a share in DEDDIE.

Strong market test turnout for DEDDIE sale, 18 players in all

A total of 18 prospective bidders have taken part in a market test staged by Goldman Sachs for power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator.

The list, forwarded by Goldman Sachs to PPC, includes investors already familiar to the Greek market such as US firm Blackrock, specializing in transportation and energy infrastructure long-term investments; prominent infrastructure funds; as well as many European operators.

France’s Engie and Italy’s Enel, both often linked with the DEDDIE/HEDNO sale, were not among the 18 market test participants, sources informed.

Interestingly, no previous market test staged to gauge interest in the prospective sale of any Greek State asset has generated such a strong turnout.

Authorities behind DEDDIE/HEDNO’s partial privatization hope this more than promising response for the market test will result in intense bidding competition and a higher sale price.

A clear picture on the number and identity of the sale’s participants will become apparent on January 29, the deadline for the procedure’s first round official expressions of interest.

Officials have attributed the strong market test interest to five key factors: the operator’s new regulatory framework; an elevated WACC level of 6.7 percent for 2021 to 2024, well over levels of between 2.5 and 3 percent offered by other European operators; strong confidence in the governance of the country, pivotal for long-term investments; good timing, as, at present, no other network operator in Europe is up for sale; and a massive accumulation of global capital currently available for investment as a result of numerous lockdowns imposed in many parts of the world since March.

The Greek government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021.

 

Investment funds targeted in operator DEDDIE’s 49% sale

Power utility PPC’s forthcoming sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, will not be limited to potential buyers with energy-market backgrounds, according to the sale’s terms, published yesterday, suggesting the seller is aiming to attract investment funds.

DEDDIE/HEDNO’s investment plan for the next five years is worth 2.3 billion euros, including 850 million euros for a nationwide digital power meter upgrade, an amount the government will seek to draw from the EU recovery fund.

Three major infrastructure funds have already expressed unofficial interest in the operator’s sale through a market test staged by Goldman Sachs, sources informed.

The sale is planned to take place over two stages, beginning with expressions of interest by candidates until a January 29 deadline, followed by a second round of binding bids from second-round qualifiers.

They will be given access to a virtual data room for evaluations before binding offers are shaped and submitted.

The government will aim to complete DEDDIE/HEDNO’s partial privatization in the first half of 2021, energy minister Costis Hatzidakis noted during an online Capital Link Forum staged yesterday.

 

DEDDIE market test next month, rules framework soon

Goldman Sachs, the privatization consultant for power distribution network operator DEDDIE/HEDNO’s forthcoming sale, plans to stage a market test in November, barring unexpected pandemic-related developments, for a measure of the level of interest of prospective bidders.

This preliminary step in the sale procedure will attract major energy players from Europe and beyond, including funds seeking to invest in infrastructure offering high and stable returns, reliable sources have informed.

A February launch of the privatization by power utility PPC, DEDDIE/HEDNO’s parent company, is considered highly likely. Bidders are expected to be given a two-month period to submit binding offers. If so, officials will be in a position to announce the winning bidder in May, 2021.

Importantly, RAE, the Regulatory Authority for Energy, still needs to announce the distribution network operator’s new regulatory framework before the market test can be launched.

A formula determining the operator’s WACC, or yield, is expected to be announced by RAE this week, or, at the very latest, early next week. An official WACC figure, helping bidders shape their bids, should be set in December.

 

PPC picks Goldman Sachs as consultant for DEDDIE sale

The board at power utility PPC has reached a decision to hire US financial services company Goldman Sachs as privatization consultant for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary, sources have informed.

This appointment is seen as the first step in preparations leading to the partial privatization, while the choice of a heavyweight consultant reflects the importance of the sale for both the government and state-controlled PPC.

The prospective entry of an investor with a 49 stake raises hopes for a major network upgrade, including digitization. Modernized infrastructure will help intensify competition in the domestic electricity market. However, enormous sums are needed.  A project entailing the installation of smart meters, alone, is budgeted at one billion euros.

European operators as well as foreign funds investing in energy networks and infrastructure expressed strong interest in DEDDIE prior to the outbreak of the coronavirus crisis.

The operator’s regulated earnings and steady yield serve as a safe and profitable haven for capital investment, while DEDDIE’s tremendous asset base expansion potential adds to the appeal for investors.

RAE, the Regulatory Authority for Energy, and DEDDIE are currently working together to further modernize the operator’s regulatory framework.

Also, DEDDIE is currently finalizing a new business plan, covering 2020 to 2028. It envisions a gradual increase of annual investments to 350 million euros, more-than-double the current level of 150 million euros.