EMEA: Six bidders progress on Idex

19 March 2018 - 12:00 am UTC

Six bidders including infrastructure funds First State Investments, IFM Investors and Partners Grouphave been shortlisted in the sale of Idex, sources said.

Antin Infrastructure Partners and Mirova Asset Management also submitted first round bids for the French district heating business, but it is not clear which have progressed.

At least one industrial player is also in the second round, sources said.

Strategics Dalkia, Engie, E.ON and Vinci were among the first round bidders, but may now be bidding as part of a consortium, or for Idex’s services arm only.

However, Dalkia and Engie’s bids could raise antitrust concerns.

Dalkia, owned by EDF, is already the market leader with 353 district heating and cooling network concessions – around half the French district heating market.

Engie, which has around 160 networks, is the second largest player.

First State, which is bidding through its portfolio company Coriance, could also face competition concerns. Coriance has a portfolio of 31 regulated district heating concessions in France, making it the fourth largest player after Idex. First State acquired the company for more than EUR 500m in 2016.

The consolidation of Idex and Coriance could lead to it being the only bidder on some small public procurement processes for heating and cooling concessions, one source said, as Dalkia and Engie tend to focus on larger deals. Therefore, despite First State’s aggressive strategy on French district heating, a “clean bid” from a financial investor could be successful.

Seller Cube Infrastructure, advised by RBC, received non-binding offers earlier in March. Final bids are due in late May, one source added.

Idex had revenues of EUR 750m in 2016, increasing to EUR 860m in 2017, with an EBITDA expected to increase to EUR 80m this year. Its holding company FISE LUX reported a EUR 74m profit in 2016.

The sale price is estimated at over EUR 1bn.

Idex’s infrastructure arm owns and operates 50 heating and cooling networks. It also owns 150 biomass plants, 150MW of wind projects – with a further 200MW in development – as well as 11 waste-to-energy, 15 biomethane projects, and geothermal plants. It distributes five million MWh of heating and cooling a year.

Its contracts include heating and cooling for Paris’ La Défense business district and various government ministries, as well as industrial and residential systems.

The services arm holds around 10,600 contracts for energy efficiency, facilities management and heating installation – mainly with public authorities. It makes up around 30% of EBITDA, but has much lower margins, and is less attractive to infrastructure funds.

Some infrastructure funds studied splitting up the business, for example by bidding in consortium with a strategic player interested in the services arm only.

Dalkia, First State and Partners Group declined to comment. Antin, Ardian, Cube, IFM, Mirova, and E.ON did not respond to requests for comment.