EnBW is looking for an investor to be able to finance the multi-billion dollar investments in its power grid.
(Photo: dpa)
Frankfurt Germany’s third-largest electricity provider, EnBW, wants to bring a long-term financial partner on board for the billion-dollar network expansion at its subsidiary TransnetBW. With the help of investment bank Morgan Stanley, the Karlsruhe-based company is preparing an investor process that could start in the summer, several people familiar with the transaction said. EnBW and Morgan Stanley declined to comment.
On the one hand, according to financial circles, a minority stake of up to 49 percent in the transmission system operator is up for sale. TransnetBW could be valued at around two billion euros, so a buyer would have to raise up to one billion euros.
On the other hand, an investor is being sought who would co-finance planned investments of up to ten billion euros in the period up to 2031. With an equity share of up to four billion euros, the investor would contribute up to two billion euros.
However, a structure is also conceivable in which the investor simply shoulders half of the total investment sum and works with more debt, said one of the people. Deal structures with a leverage ratio of more than 80 percent have already been seen in other infrastructure financings.
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The money is primarily intended for the Suedlink “electricity highway”, which is intended to bring wind power from the coast to the industrial centers in southern Germany. Since EnBW is 90 percent owned by the state of Baden-Württemberg and the state’s municipalities, a public tendering process in accordance with EU guidelines is necessary.
Several projects and business areas have already been opened to partners
Regarding the search for investors, EnBW CFO Thomas Kusterer said at the end of February: “The resulting financial inflow would be available for growth investments and thus support the further expansion of our overall portfolio in a balanced way.” Partnerships are more sensible and necessary than ever in a networked energy industry.
EnBW has already opened up several strategic and capital-intensive projects and business areas to partners in recent years. These include the distribution grids of Netze BW in Baden-Württemberg for over 200 towns and communities. Other examples are the offshore wind farms EnBW Hohe See/Albatros and EnBW Baltic 2.
According to financial circles, possible future shareholders of TransnetBW are primarily investors who do not demand an active say in the strategy and who manage with returns of five to six percent. These include above all pension funds such as PSP, OTPP, CDPQ, APG and PGGM or insurers such as Allianz or Munich Re. It is unclear whether infrastructure funds, which usually have slightly higher return requirements, will also participate in the auction, such as EQT, GIP, JP Morgan or Macquarie.
In the future, EnBW intends to continue concentrating on the expansion of renewable energies and the power grid infrastructure. That was the only way to get out of dependence on Russia, said the outgoing company boss, Frank Mastiaux, when the balance sheet was presented in March. “In Germany, we now have to speed up the transition to a long-term CO2-free energy supply.”
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