Gas Natural appoints Rothschild to conduct Italian unit sale - sources
17 JAN 2017
Gas Natural Fenosa [BME:GAS] (GNF), a Spanish gas utility, has appointed Rothschild to dispose of its Italian business which may go on sale next month, two sources briefed on the situation said.
Last month, this news service reported that GNF had entered discussions with a number of banks pitching ideas to either grow or dispose of its Italian business, with Rothschild the front-runner among potential advisers.
GNF is now looking to launch a sale next month, the two sources briefed said. A sector lawyer said he thought the process will likely be a market test, and the company has yet to fully decide if it intends to exit Italy or commit to growing the business.
The unit is being valued at around EUR 700m, the sources briefed and the lawyer said. However, the eventual figure is likely to be less than this, the sources briefed, the sector lawyer and a sector banker following the situation said.
When taking into account any debt placed on GNF’s Italian business, the final sale consideration may be less, the first source briefed said. A figure closer to EUR 500m is more likely, the sector lawyer added.
The structure of regional energy concessions in Italy may hamper the process, the banker following said. Unless the company is the local concession holder it does not have control over developing assets in the area, the banker said.
Italgas [BIT:IG] would be in the best position to consolidate in this space, the banker and second source briefed said.
After Italgas, the unit may be of interest to infrastructure funds, the second source briefed added.
However, with infrastructure funds, there is a difficulty in forming a valuation for the unit, the lawyer said, with its regulated assets being valued on a multiple of the regulated asset base, and its merchant power assets valued using a different metric such as EBITDA.
Players that have been linked to the aborted sale of Eni's [BIT:ENI] gas and power unit would be logical parties with a potential interest in the unit, a third sourced briefed on the matter said, pointing to EDF's [EPA:EDF] Edison, Centrica [LON:CNA], Warburg Pincus, Permira, Bain Capital and CVC as examples.
GNF's Italian business recorded EBITDA of EUR 66m in 2015, according to GNF's annual report.
GNF has been present in Italy since 2002 and owns four subsidiaries: Gas Natural Italia, Gas Natural Vendita Italia, Gas Natural Distribuzione Italia and Gas Natural Rigassificazione Italia.
GNF and Italgas did not respond to requests for comment. Rothschild declined to comment.