MADRID/AMSTERDAM (Reuters) – Spanish utility Endesa (ELE.MC) has launched a two-stage auction for the sale of its gas distribution and transmission network, attracting financial investor interest, several people familiar with the matter said.
Earlier on Thursday, the chief executive of Italy‘s biggest utility, Enel (ENEI.MI), which owns 92 percent of Endesa, said it had received 20 offers for the gas network, which market sources say could fetch up to 760 million euros ($931 million).
Enel, Europe’s most indebted utility, is also selling Endesa’s Spanish high voltage grid to Red Electrica (REE.MC) and preparing to divest a stake in its renewable unit, as it tries to raise cash and maintain its credit rating.
Several sources close to the bidders for the Spanish gas network said they had submitted expressions of interest but that they would have to go through a two-stage process, with Endesa just opening the books on the sale and indicative offers due in two weeks. Final offers would be sought soon after, they added.
Among the financial investors interested are infrastructure funds from Macquarie (MQG.AX), Goldman Sachs (GS.N), Prudential’s (PRU.L) M&G Investments, CVC Capital Partners and BNP Paribas-sponsored (BNPP.PA) Antin Infrastructure Partners, sources close to the investors said.
AXA (AXAF.PA) Private Equity and Italian investment fund F2i, which acquired 80 percent of Enel’s Italian gas grid last year, will also bid for the Spanish asset, AXA Private Equity’s head of infrastructure told Reuters in March.
Endesa, CVC and Antin did not immediately respond to a request for comment. Macquarie, Goldman Sachs and M&G declined to comment.
Endesa’s network, which comprises 4,050 kilometres of gas distribution tubes and 859 kilometres of gas transport tubes covering several Spanish regions including Aragon, will appeal more to financial rather than trade buyers, sources said.
The sale’s terms resemble Enel’s sale of its Italian gas grid last summer, in that 80 percent of the network is for sale and there is a call option that makes the asset less attractive to industrial investors such as utilities, the sources said.
Endesa’s Spanish gas assets have some 397,000 connection points and made 2009 earnings before interest, tax, depreciation and amortisation (EBITDA) of 58.4 million euros, people familiar with the matter have previously told Reuters.
Industry sources have suggested Endesa could get between 10 to 13 times EBITDA for the assets, implying a valuation of between 584 and 760 million euros.
Enel shares closed up 4 percent, outperforming the STOXX Europe 600 Utilities index .SX6P, which was up 3 percent. Endesa shares closed up 2.8 percent.
Any buyer would also have to spend around 200 million euros to fund the network’s investment plans for expansion in transmission pipelines, though such investment would boost the asset’s regulated asset base, two of the sources said.
By Greg Roumeliotis and Jonathan Gleave
(Editing by Will Waterman and Sharon Lindores) ($1=.8163 Euro)