GDF Suez Selling Italian Gas Grid in $1.1 Billion Deal

GDF Suez Energia Italia, owner of Europe’s largest gas distribution network, is selling its Italian gas grid for $1.1 billion, in the latest in a spate of asset sales by the world’s biggest utility.

French group GDF sold the network to French insurer AXA‘s private equity arm and Italian investment fund F2i.

The transaction is expected to be completed in the last quarter of this year.

PRESS RELEASE:

Fondi italiani per le infrastrutture and AXA Private Equity signed an agreement to purchase G6 Rete Gas S.p.A., a wholly-owned subsidiary of GDF Suez Energia Italia S.p.A. engaged in gas distribution.

Following the investment in Enel Rete Gas S.p.A. (September 2009) and the recent acquisition of E.On Rete srl (April 2011), this transaction allows the Consortium made up of F2i (75%) and AXA Private Equity (25%) to expand its innovative footprint in the natural gas distribution sector as the main independent operator, with a 17% market share in terms of customers managed and second only to the Eni group.

The deal is worth €772 million (Enterprise Value) and is funded by a committed line of credit provided by Banca IMI and Unicredit.

G6 Rete Gas operates 474 concessions, providing natural gas to approximately 990,000 customers throughout the country (particularly in Puglia, which accounts for 32 percent of total customers), through a grid of approximately 15,159 kilometers.

In 2010 the company had revenues of €160 million and an EBITDA of €82million, reflecting a significant improvement in terms of revenues (up 11% on previous year) and an EBITDA margin (up 3.2% compared with the previous year).

The transaction is expected to be completed in the last quarter of 2011 and is subject to antitrust clearance.

F2i and AXA Private Equity retained Bank of America–Merrill Lynch, Banca Imi and Unicredit as advisors, the legal firm of Gianni, Origoni, Grippo & Partners for the deal and the legal firm of Ashurst for the financing.

The Consortium intends to complete the acquisition of G6 Rete Gas through Enel Rete Gas with the objective to have the latter combine all the assets of the F2i Reti Italia group (vehicle held by the Consortium, which owns an 80% equity interest in Enel Rete Gas) in the gas distribution sector.

Following the acquisition by F2i, Enel Rete Gas has become leader in gas distribution operations in terms of investment and service quality:

  • Investments of €63.00 per customer vis-à-vis a sector average of €47.00
  • Grid inspection equal to 78% compared to a national average of 55%
  • Average time to repair gas escapes of 35 minutes versus a standard of 60 minutes set by the Energy Authority

Thanks to such excellent operating standards, in 2010 Enel rete Gas obtained from the supervision authority, a 44% quality ratio, even though Enel rete Gas had only a 13% market share.

Following the combination with E.On Rete and G6 Rete Gas, Enel Rete Gas should manage a pool of approximately 3.8 million customers, providing approximately 6 billion cubic meters per year through a grid of 53,000 kilometers.

With today’s acquisition, the F2i Reti Italia group has strengthened its competitive position in the natural gas distribution segment, also in view of the upcoming Minimum Territorial Areas.

ABOUT AXA PRIVATE EQUITY

AXA Private Equity is a leading private equity firm with US$25 billion in managed assets and a global reach extending across Europe, North America and Asia. The firm offers investors the full spectrum of private equity services for every market segment: direct funds, infrastructure financing, mid cap and small cap buyouts, venture capital, co-investments, fund of funds as well as mezzanine financing. With offices in Paris, Frankfurt, London, New York, Singapore, Milan, Zurich and Vienna, AXA Private Equity supports the development and long-term growth of its portfolio companies with sustainable growth strategies and by granting them access to the AXA international network. AXA Private Equity has earned the trust of its investors by regularly supplying them with transparent performance data on its funds and portfolio companies.

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