Canadian funds among bidders for German metering firm Ista: Reuters

Hong Kong’s CK Infrastructure is vying with Canadian investors to buy German metering and energy management group Ista, which could be worth more than 4.5 billion euros (US$5 billion), sources close to the matter told Reuters on Tuesday.

CKI, part of ports-to-telecoms conglomerate CK Hutchison which is chaired by tycoon Li Ka-shing, put in a non-binding bid for private equity-owned Ista earlier this month, they said.

It is competing with Canada Pension Plan Investment Board, which already owns a minority stake in Ista and has tied up with the Blackstone Group to make a bid for the full company, they added.

Altogether, a handful of bids came in, including one from Canada’s Brookfield Asset Management and Ontario Teachers’ Pension Plan, with final offers due around July 10, the sources said.

Canada’s Caisse de dépôt et placement du Québec and Kuwait’s Wren House Infrastructure had also expressed interest, but it remained unclear whether they placed offers.

European buyout group CVC Capital Partners, which bought Ista in 2013 at a valuation of 3.1 billion euros, is hoping to fetch a price tag of up to 5 billion euros or 12 times Ista’s expected earnings before interest, tax, depreciation and amortization (EBITDA) of 420 million euros, the sources said. First-round bids came in closer to 10.5 to 11 times core earnings.

Ista, which provides energy and water metering, posted EBITDA of 370 million euros in 2016, on sales of 850 million.

CVC and the bidders declined to comment or were not immediately available for comment.

European bankers are working on debt financings in excess of 7 times Ista’s EBITDA. Some bankers are working on leverage levels as high as 8.5 times, banking sources said.

CVC’s advisor Goldman Sachs is offering a staple of around 5.8 times, significantly lower than European banks, in a bid to comply with the U.S. leveraged lending guidelines.

Hoping to attract sponsors, the staple is a hybrid and has infrastructure-style features, including full dividend capacity from closing, to enable dividend payments, the sources said.

By Arno Schuetze and Christoph Steitz

(Additional reporting by Claire Rucking in London and Matt Scuffham in Toronto; Editing by Elaine Hardcastle)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Ista