Pension funds dominate Orsted shortlist

08 January 2019 - 12:00 am UTC

Danish pension funds ATP and PKA as well as international peers CDPQ and OMERS have progressed to the second round in the process for Danish energy group Orsted’s sale of its electricity grid around Copenhagen, sources said.

ATP in a consortium with local utility co-operative SEAS-NVE is through to the second round as is another consortium comprising OMERS and local pension fund PKA. A separate bid from OMERS’ fellow Canadian pension fund CDPQ has also progressed to the second round as has one from Italian energy group Enel, sources said.

However, international infrastructure investors Brookfield Asset Management and First State did not progress to the second round having submitted first round bids, sources said. QIC is also understood to have submitted a bid in consortium with Dutch pension fund APG, but it was not clear if the bid progressed to the second round. One source said CKI was also not shortlisted.

The bidders either declined to comment or did not respond to requests for comment. Enel, CDPQ, SEAS-NVE, PKA, First State, QIC and Brookfield declined to comment. OMERS, ATP, APG and CKI did not respond to requests for comment.

Orsted – formerly DONG Energy – announced in June that it has appointed Danske Bank to sell its Danish power distribution business Radius, as well as its residential customer and street lighting businesses. First round bids for the assets were due last month.

Analysts expect Radius sell for around DKK 14bn (EUR 1.9bn), based on a premium to its regulatory asset base of DKK 10.6bn.

Radius supplies around 1m customers in and around Copenhagen (pictured) and neighbouring areas in the east of the island of Zealand. The residential customer and street lighting businesses are much smaller.

Citi and Danske Bank are Orsted’s mandated financial advisors, and are working alongside Kromann Reumert, EY, Sweco and McKinsey to conduct the sale.

Industry observers say that local pension funds will be in a strong position in the auction given that the Danish government, which owns 50% of Orsted, is likely to favour Danish involvement in any winning bid.

However, foreign investors have more experience of managing utility grids as most grids in Denmark are operated by cooperatives. OMERS has a 50% stake in Ellevio, one of the three main regional operators of Sweden’s electricity grids, while CDPQ’s energy transmission portfolio includes a stake in Belgian gas pipeline operator Fluxys.

 

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