Legislative revisions to unblock DEPA Infrastructure sale

The energy ministry is planning to soon submit to Parliament legislative revisions designed to resolve pending issues that have held back the final stage of a privatization concerning gas company DEPA Infrastructure, sources have informed. The ministry will aim for the submission of binding offers by July.

Issues that have held back the sale, offering suitors 100 percent of DEPA Infrastructure, include a pending unification of the asset base of DEPA Infrastructure’s trio of EDA gas distribution subsidiaries and the establishment of a sale procedure for Eni Gas e Luce’s 49 percent stake in EDA THESS.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Italy’s Eni gas e Luce, maintaining the management rights with its 49 percent share in the gas distributor, wants to sell its stake.

Eni gas e Luce’s involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

The ministry’s anticipated legislative revisions promise to unify the asset bases of EDA Attiki, distributing to the wider Athens area, EDA THESS (Thessaly and Thessaloniki), as well as DEDA, covering the rest of Greece.

This asset base unification concerning the three distributors will lessen DEDA’s cost burden resulting from its network expansion projects as small distribution surcharge hikes by the two other EDA companies will hasten DEDA’s recovery of investment costs.

EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); and a consortium comprising SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd are the qualifiers through to the final round of the DEPA Infrastructure privatization.

HEDNO VDR opening Tuesday, bidders in partnership talks

Power utility PPC plans to open a virtual data room concerning the sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, on Tuesday, once confidentiality agreements with nine second-round qualifiers, and other documents, have been approved by the utility’s board, expected a day earlier.

All documents necessary for the sale procedure will be forwarded to the nine bidders for observations.

The VDR will offer bidders access to technical and financial data concerning DEDDIE/HEDNO.

As of next week, PPC and each of the nine second-round qualifiers, preparing to make binding bids, will begin separate talks, correspondence and negotiations that are expected to run for months, for the finalization of a shareholders agreement.

Given the width of second-round qualifiers, this privatization’s completion is anticipated towards the end of autumn.

The buyer’s board representation will reflect the minority 49 percent stake to be acquired, with 5 members on an eleven-member board, or 4 members if a nine-member board is chosen.

Some board members will be given reinforced managerial roles for the PPC subsidiary. Proposals for the chief financial officer and chief operating officer posts will be made by the buyer, according to sources.

Though the road ahead towards the DEDDIE/HEDNO sale’s completion is long, the nine second-round qualifiers have already begun talks for possible partnerships, between themselves and beyond.

One of the nine qualifiers, the US fund CVC Capital Partners – whose Greek portfolio is continuously growing, investments including three hospitals, Metropolitan, Iaso General and Ygeia, as well as imminent deal completions for food production conglomerate Vivartia, dairy company Dodoni, and insurance company Ethniki Asfalistiki – is engaged in talks with fellow US fund KKR and Australia’s Macquarie for the establishment of a consortium that would bid as one for a 49 percent stake in DEDDIE/HEDNO. KKR and Macquarie are among the nine second-round qualifiers in the DEDDIE/HEDNO sale.

HEDNO suitors all real-money investors with long-term views

All nine qualifiers through to the second round of a tender offering a 49 percent stake of distribution network operator DEDDIE/HEDNO possess extensive experience in infrastructure management around the world and are long-term, real-money investors.

The tender’s shortlist, announced yesterday, includes Blackrock, the world’s biggest investment fund, back in the Greek picture after subscribing to a bond issue staged last month by the operator’s parent company PPC, the power grid operator.

Blackrock has based these investment decisions on Greece’s economic prospects beyond the pandemic as well as common business principles shared with PPC.

The capital managed by the nine qualifiers is worth 10.2 trillion euros. More importantly, the qualifiers are backed by formidable profiles, their portfolios carrying investments in utilities, infrastructure and energy companies.

France’s Ardian, managing assets worth over 100 billion euros, Canadian investment corporation British Columbia Investments (BCI), handling a 100 billion-euro portfolio, the American funds Blackrock, managing assets worth 9 trillion dollars, CVC Capital Partners (120 bn), KKR (250 bn) and Oak Hill (50 bn), Italy’s infrastructure fund F21, as well as Australia’s Macquarie (420 bn) and First Sentier (180 bn) are all long-term investors.

BCI and Macquarie have jointly engaged in a series of takeovers, beginning in 2012 with German networks company Open Grids Europe, and following up, in 2014, with US electricity firm Cleco, and networks company Endeavour Energy in 2017. BCI also controls Chilean power distributor Transelec as well as Canada’s Corix.

Blackrock controls US corporation Hearthstone Utilities and the UK’s Kelas Midtream and Calisen PLC, active in smart meters.

America’s KKR acquired New Jersey water management company Bayonne Water and Wastewater Concession in 2012 and Middletown Water in 2014.

Macquarie’s portfolio includes Spain’s Viesgo, Germany’s Open Grid Europe, and the portfolio of First Sentier (previously First State) includes the UK’s Electricity North West and Anglian Water.

HEDNO 49% privatization shortlist set to be announced tomorrow

A short list of qualifiers through to the second and final round of a privatization offering a 49 percent stake of distribution network operator DEDDIE/HEDNO is expected to be announced tomorrow, when endorsed by the board of the operator’s parent company PPC, the power utility.

The qualifiers will be given access to confidential data stored in the tender’s video data room.

Though PPC has not offered details on the first-round participants, informing only that the bidders, eleven in total, are strategic investors, network infrastructure operators and funds, banking officials have leaked their identities, revealing the turnout of leading international investors.

They include US fund Blackrock, the world’s biggest investment fund, as well as fellow American funds KKR, Oak Hill Advisors and CVC Capital Partners, the recent buyer of insurance company Ethniki Asfalistiki.

One of Europe’s biggest funds, France’s Ardian, two Australian funds, Macquarie and First Sentier, Italy’s infrastructure fund F21, Canadian investment corporation British Columbia Investments (BCI), Chinese consortium China South Power Grid – China Three Gorges, and fellow Chinese firm Guangzhou Power make up the other seven first-round entries.

DEDDIE/HEDNO’s new business plan, covering 2021 to 2024 and carrying investments totaling 3.5 billion euros, is a key driver behind the considerable interest, as is a yield rate of approximately 7 percent offered by the operator.

Standout features of the operator’s new business plan include an 850 million-euro project entailing the installation of 7.5 million digital power meters around the country, whose tender is nearing; an addition, to networks, of fiber optics for telecommunication and 5G services; as well as projects for undergrounding, upgrading and modernizing networks in anticipation of mass investments in RES units.

DEPA Infrastructure sale could include Eni’s 49% in EDA Thess

The likelihood of revisions to Greek privatization fund TAIPED’s ongoing sale of DEPA Infrastructure that would incorporate the sale of a 49 percent stake in gas distributor EDA THESS, held by Italy’s Eni gas e Luce, into the procedure is now seen as probable as talks on the prospect have advanced.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce maintains the management rights with its 49 percent stake in the gas distributor.

Though Eni gas e Luce has been particularly upbeat in its judgement of EDA THESS’s performance until now, its involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

Eni gas e Luce’s 49 percent stake in EDA THESS is the Italian company’s sole distribution investment.

Prior to TAIPED’s launch of the DEPA Infrastructure sale, Eni gas e Luce had made clear its intentions to withdraw from its Greek investment in gas distribution.

DEPA has decided not to exercise priority rights it holds for EDA THESS’s 49 percent stake.

Eni gas e Luce initially seemed to reach an agreement to transfer its EDA THESS stake to Italgas, Italy’s biggest gas distributor and Europe’s third largest. However, Greek officials objected, deeming such a move would have given Italgas an advantage over rivals in the sale of DEPA Infrastructure. Italgas is one of six bidding teams through to this privatization’s second round.

Following a period of stagnancy, Eni gas e Luce returned, late in 2020, with a fresh proposal to TAIPED, calling for the attachment of its 49 percent stake in EDA THESS to the DEPA Infrastructure sale.

Besides Italgas, the other five bidding formations that have qualified for the second round of the DEPA Infrastructure sale are: EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd.

 

Operator DEDDIE 49% sale first-round bids submitted today

State-controlled power utility PPC and the government will be hoping today’s first-round, non-binding deadline for expression of interest in the 49 percent sale of the utility’s subsidiary DEDDIE/HEDNO, the distribution network operator, can attract a solid turnout of formidable bidders.

An onslaught of criticism against DEDDIE/HEDNO over the past few days following widespread power outages caused by Medea, as the extreme weather system was dubbed, certainly has not been good for the operator’s reputation.

On the other hand, the network’s deficiencies, exposed by extensive weather-related damages in the wider Athens area, lends tremendous support to the need of a powerful investor ready to finance the network’s badly needed upgrade, expected to cost 3.5 billion euros.

Expectations of a solid investor turnout have been high in the lead-up to today’s first-round deadline. PPC plans to announce this sale’s first round participants during the day.

Many prominent funds have shown interest in the sale but the identities of those that will follow through and participate have remained unclear. It also remains unclear if any of these funds will establish partnerships – for the DEDDDIE/HEDNO sale – with European network operators.

A market test staged in December, as well as contact with interested parties, has indicated that the American funds KKR and Blackrock, Australia’s Macquarie Group, and France’s Ardian, could participate in the sale.

The managerial rights to be attached to the minority 49 percent stake will be bolstered to not block potential buyers from crucial decisions.

DEDDIE/HEDNO possesses a regulated asset base worth over 3 billion euros, networks totaling 242,000 km in length, 240 high-voltage substations, 163 low-voltage substations, a 5,800-member workforce, and a client base numbering 7.5 million.

The company caters to annual demand of 43.194 TWh and 57,752 RES units with a total capacity of 3,926 MW.

Two funds submit DEDDIE interest ahead of sale’s preliminary deadline

Two undisclosed funds have jumped the gun to submit non-binding, first-round expressions of interest for the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO three days before a February 19 deadline, highlighting the heightened level of buyer interest that surrounds this privatization.

European and US investment teams, more so than network operators, have shown particular interest in the DEDDIE/HEDNO sale during its lead-up.

A market test in December revealed that 19 potential bidders include New York-based Blackrock, the world’ biggest investment fund, managing capital worth 7.8 trillion dollars; American giant KKR, handling 220 billion dollars; as well as French fund Ardian, one of Europe’s most dynamic, with involvement in over 150 enterprises and capital management worth more than 100 billion dollars.

Though it remains unknown if any of the aforementioned players were early birds, it has become very clear that funds will play a big role in this sale.

In an effort to add to the sale’s appeal, power utility PPC, DEDDIE/HEDNO’s parent company, has decided to bolster the 49 percent minority rights by offering potential buyers equal powers with PPC over crucial network operator decisions.

Between four and seven investment teams have displayed the greatest level of interest in the DEDDIE/HEDNO sale. Some of these teams are believed to be engaged in negotiations to establish new formations for this sale.

Four teams, backed by funds, display strong DEDDIE interest

Prospective bidders considering power utility PPC’s sale of a 49 percent stake in subsidiary firm DEDDIE/HEDNO, the distribution network operator, have flooded the seller with a stream of enquiries ahead of a February 19 deadline for non-binding expressions of interest.

Interested parties had until February 5 to make enquiries before they can officially express interest in the sale later this month.

Interest in the distribution network operator is definitely strong. Questions received at PPC indicate that four investment teams, with the involvement of major funds, are maintaining the strongest interest in the DEDDIE/HEDNO sale.

Prospective buyers lodged enquiries on a range of issues, including the sale’s rules for funds, whether participating funds will need to submit their equity line-ups in full detail, and if supporting documents can be submitted in languages other than English.

A market test for the upcoming partial privatization staged by Goldman Sachs in December disclosed that interested parties include New York-based Blackrock, the world’s biggest investment fund managing capital worth 7.8 trillion dollars, US giant KKR, backed by capital worth 220 billion euros, as well as French fund Ardian, one of Europe’s strongest, linked with over 150 enterprises and capital management worth more than 100 billion dollars.

In an attempt to strengthen the sale’s appeal, PPC will guarantee the strategic investor holding a 49 percent stake in DEDDIE/HEDNO no obstacles in decisions concerning crucial matters.

However, the minority rights for DEDDIE/HEDNO’s prospective 49 percent stakeholder will not be as strong as they are for power grid operator IPTO’s Chinese strategic partner SGCC. DEDDIE/HEDNO will retain the operator’s managerial control.

Authorities had considered a two-stage sale of DEDDIE/HEDNO’s 49 percent, beginning with a stake of about 30 percent and a further 19 percent at a latter date, when market conditions may have improved, before opting for a one-off procedure.

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.

DEPA Comm VDR open; 5-year stay for Infrastructure buyer

The video data room for the privatization procedure of DEPA Commercial, one of two new gas utility DEPA entities placed for sale, is now open to prospective bidders, but initial information made available is limited to non-financial details.

Financial details on DEPA Commercial will be made available as a second step to all consultants representing the potential buyers, while a third and final stage will follow to conditionally offer bidders confidential information in person at the DEPA headquarters.

As previously reported, the second-round, binding-bids deadline for the DEPA Commercial sale, offering investors a 65 percent stake, has been extended to March, 2021.

The field of second-round qualifiers is comprised of two partnerships, Hellenic Petroleum (ELPE) with Edison and power utility PPC with Motor Oil Hellas, plus Mytilineos, TERNA, the Copelouzos group, Shell, and the Swiss-based MET Group.

As for DEPA Infrastructure, the other new DEPA entity up for sale, energy minister Costis Hatzidakis is preparing a legislative revision that will require the winning bidder to retain its company shares for a period of at least five years.

This condition will also apply for the DEPA Infrastructure subsidiaries EDA Attiki, EDA Thess and DEDA, the gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively. DEPA fully owns DEDA and EDA Attiki and holds a 51 percent stake in EDA Thess.

The DEPA Infrastructure binding-bids deadline has also been extended to the end of February, 2021. Italgas, EPH, First State Investments, KKR, Macquarie and Sino-CEEF have qualified for the final round.

 

DEPA Infrastructure VDR open, DEPA Commercial data soon

A virtual data room has just been opened for the six bidding teams preparing to make second-round offers in the privatization of gas company DEPA Infrastracture, an offshoot of gas utility DEPA.

Czech company EPH, Italy’s Italgas, the Australian investment funds First State Investments and Macquarie, US firm KKR and China’s Sino-CEEF & Shanghai Dazhong Public Utilities now have access to all relevant data concerning the DEPA Infrastructure sale.

Another VDR is expected to be opened within the next few days for bidders participating in the privatization of DEPA Commercial, DEPA’s other entity up for sale.

The participants in this sale, seven entries in total, are: Motor Oil Hellas-PPC, ELPE-Edison, Mytilineos, GEK-TERNA, the Copelouzos group, Dutch company Shell and the Swiss-based MET Group.

VDR information for the DEPA Commercial sale will be made available over three phases as a protective measure intended to ensure competition. The first phase, offering non-sensitive data, will be open for all. Access to VDR information during the second stage, offering sensitive data, will be restricted to consultants. Bidders will be offered conditional access to confidential information in the third phase.

Greece’s privatization fund TAIPED is aiming to declare preferred bidders for both sales in the final quarter of this year. Market officials, however, believe this is more likely to occur in the first quarter of 2021.

DEPA Commercial bidders are allowed to team up and establish consortiums but partnerships for the DEPA Infrastructure sale are not permitted.

Bidders participating in the DEPA Commercial sale are mainly eyeing the company’s prized asset, retail gas supplier and subsidiary Fysiko Aerio Attikis, covering the wider Athens area. This company already serves close to 400,000 households and 10,000 businesses.

DESFA trio may return to DEPA Infrastructure sale, Italgas link-up seen

Italgas, one of six bidders through to the second round of a tender offering DEPA Infrastructure, a new entity established by gas utility DEPA as part of its privatization, intends to join forces with Snam, Fluxys and Enagas, the three members of the Senfluga consortium that acquired a 66 percent of Greek gas grid operator DESFA late in 2018.

The trio of companies controlling DESFA had expressed first-round interest in the DEPA Infrastructure sale but failed to show up for the procedure’s second round.

Snam, head of the Senfluga consortium with a 60 percent stake, is associated with Italgas as it has held a 13.5 percent stake since 2016.

Italgas is widely tipped to emerge victorious in the DEPA Infrastructure sale.

Besides Italgas, the five other qualifiers through to the second round of the DEPA Infrastructure sale are: EP Investment Advisors; First State Investments (European Diversified Infrastructure Fund II); KKR (KKR Global Infrastructure Investors III L.P.); Macquarie (MEIF 6 DI Holdings); and the Sino-Cee Fund & Shanghai Dazhong Public Utilities consortium.

Once they have signed confidentiality agreements, the six qualifiers will receive second-round texts and access to a virtual data room hosting DEPA Infrastructure data and information.

Italy’s Snam, Italgas face off in DEPA Infrastructure sale

Snam, Italy’s gas grid operator, and Italgas, the neighboring country’s biggest natural gas distribution company, have emerged as rivals, despite sharing common interests, in a Greek privatization offering a full stake in DEPA Infrastructure, a new entity formed by Greece’s gas utility DEPA.

The Snam group holds a 13.5 percent stake in Italgas. Also, the two companies have a common key shareholder, CDP Reti, holding a 28.98 percent stake in Snam and a 26.05 percent share of Italgas.

The showdown between Snam and Italgas could end up leaving both bidders out of the DEPA Infrastructure privatization, whose deadline for first-round expressions of interest expires today following a slight extension.

The participation of both players in the DEPA Infrastructure privatization would represent a violation of the sale’s terms, privatization fund TAIPED has already pointed out following a related query.

Fully aware of the situation, Snam has sought a solution. The Italian firm could form another consortium as it had done for the sale of Greek gas grid operator DESFA. Snam led a consortium, Senfluga, joined by Fluxys and Enagas, for the acquisition of a 66 percent stake of DESFA.

Two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to submit expressions of interest today. Two other funds, both undisclosed, one from China, the other from the Middle East, could also participate. Additional entries have not been ruled out.

Strong turnout seen for DEPA Infrastructure sale tomorrow

A solid build-up to tomorrow’s first-round deadline for a tender offering a full stake in DEPA Infrastructure, a new entity formed by gas utility DEPA, has indicated at least ten European operators as well as funds from beyond the continent will submit expressions of interest.

Snam, Fluxys, Enagas, Italgas, two major US funds, KKR and Blackrock, as well as Australia’s Macquarie, are among the field of players tipped to turn up.

Two undisclosed funds, one from China, the other from the Middle East, are also believed to be among the prospective bidders.

Candidates see DEPA Infrastructure’s investment plan as an opportunity for prospective synergies. Budgeted at 400 million euros, it envisions the development of a series of pipeline projects and other infrastructure in the wider southeast European region over the next five years.

Snam, Fluxys and Enagas, who formed a consortium named Senfluga to acquire a 66 percent of Greek gas grid operator DESFA in 2018, are expected to move independently for the DEPA Infrastructure tender’s first round, fearing antitrust regulations, before regrouping later on.

DEPA Infrastructure sale luring bidders, deadline Friday

The government and privatization fund TAIPED are expecting strong investor interest in the full sale of gas utility DEPA’s new entity DEPA Infrastructure, a procedure whose deadline for non-binding expression of interest expires this Friday at 5pm.

Authorities will not offer a deadline extension despite requests for more time, sources informed.

Italy’s Italgas, France’s Engie, Spain’s Reganosa as well as two major US funds, KKR and Blackrock, and, possibly, Australia’s Macquarie, are believed to be among the field of players eyeing the DEPA Infrastructure privatization. Senfluga, a consortium made up of Greek gas grid operator DESFA shareholders, is also considering participating in what should be a last-minute decision following related preparations.

Italgas, Italy’s biggest distribution network operator and third biggest in Europe, is believed to have held talks with fellow Italian company Eni for the acquisition of a 49 percent stake of gas distributor EDA Thess, covering the Thessaloniki and Thessaly areas. This stake is currently held by Eni subsidiary Eni Gas e Luce.

France’s Engie, also eyeing other opportunities in the Greek market, has partnered with Energean Oil & Gas and GEK-Terna with the intention of jointly bidding for an underground gas storage facility to be developed at a depleted offshore gas field in the south Kavala region.

TAIPED, the privatization fund, is offering DEPA’s 65 percent share in DEPA Infrastructure while Hellenic Petroleum ELPE is selling its 35 percent stake.