CPPIB, PSP among bidders vying for Morgan Stanley gas network: Reuters

(Reuters) – Three bidding groups have entered the second round in the race for Spanish natural gas distributor Madrileña Red de Gas, majority owned by Morgan Stanley (MS.N), three sources familiar with the matter said on Wednesday.

Canada Pension Plan Investment Board (CPPIB) is bidding alongside German insurer Allianz (ALVG.DE) and the Abu Dhabi Investment Authority (ADIA) for the asset, estimated to be worth between 1.2 billion euros (US$1.3 billion) and 1.8 billion including some 500 million euros of debt.

Public Sector Pension Investment Board (PSP Investments) and European fund manager Arcus have also teamed up to make an offer, while a third group comprises Chinese state fund Gingko Tree and Dutch pension fund PGGM, the sources said.

Madrileña Red de Gas, Morgan Stanley, Allianz and ADIA declined to comment. Arcus, CPPIB, Gingko Tree, PSP Investments and PGGM were not immediately available to comment.

Citi (C.N) is selling the asset, which is majority owned by Morgan Stanley’s infrastructure arm. Citi declined to comment.

The U.S. bank has also toyed with a stock market flotation for the company, but has decided it could get a better price through a sale, one of the people said.

Madrileña Red de Gas has some 5,350 kilometers of pipelines and had core earnings (EBITDA) of 149.2 million euros in 2014. Last July, Spain introduced major reforms in the gas sector aimed at cutting gas transport and distribution fees, and ensuring stability in a system that has struggled with both excess supply and capacity.

Madrileña originally comprised of gas supply and distribution activities. It was bought from Gas Natural (GAS.MC) by Galp Energia (GALP.LS) and Morgan Stanley in 2010 for a total of 800 million euros, after regulators forced a sale.

Galp Energia took on the supply businesses, while Morgan Stanley bought the distribution assets.

By Freya Berry and Andrés González

(Editing by Pamela Barbaglia and David Holmes)

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

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