Gas Natural Fenosa sells 20% of natural gas distribution business in Spain to Allianz Capital Partners and Canada Pension Plan Investment Board for 1.5 billion euros
- Gas Natural Fenosa will maintain control, with a shareholding of 80%.
- The terms of the operation set the full value of GNDB (the “Enterprise Value”) at 13.935 billion euros.
- 15.7 Equity Value/EBITDA multiple.
Gas Natural Fenosa has signed an agreement to sell a minority stake of 20% in the company that owns the natural gas distribution assets in Spain (GNDB) to a consortium of long-term infrastructure investors made up by Allianz Capital Partners (ACP) and Canada Pension Plan Investment Board (CPPIB).
Gas Natural Fenosa has reached an agreement to sell a minority stake of 20% in its gas distribution business in Spain to a consortium made up by Allianz Capital Partners and Canada Pension Plan Investment Board for the total sum of 1.5 billion euros in cash, which represents an “enterprise value” (100%) for GNDB of 13.935 billion euros. This equates to 15.7xEV/EBITDA, based on a 2016 EBITDA reported at 889 million euros.
Gas Natural Fenosa will maintain an 80% shareholding and will continue to manage and consolidate GNDB through global integration.
The resources stemming from this operation will be used to back up future investment needs in existing projects, while any surplus will be used on future investments, debt optimisation or shareholder remuneration, as may be decided by the GNF Board of Directors.
GNDB is the largest gas distribution network in Spain, with over 5.3 million connection points supplying close on 1,100 towns. Following this operation, GNF will continue to own a shareholding of 80% in GNDB, which remains an essential part of the GNF business portfolio.
GNF is partnering with a consortium of new investors to continue developing its long-term strategy in the gas distribution business, invest in future growth and increase gas penetration in Spain.
Increased natural gas penetration in Spain should also support the growing demand for gas, as well as greater use of regasification and transport infrastructures.
The terms of the operation set the full value of GNDB (the “Enterprise Value”) at 13.935 billion euros. In exchange for the sale of this 20% stake, GNF will receive a payment of 1.5 billion euros in cash from the consortium.
As part of the operation, GNF will enter into a long-term intra-group financing agreement of six billion euros with GNDB that will not affect the capital structure of GNF or its rating. It is expected that the operation will generate positive equity reserves at the company amounting to approximately 1.04 billion euros.
Closure of the deal is subject to issue of the necessary approval from the regulators and competent bodies. If these conditions are met, Gas Natural Fenosa expects to complete the operation in or before January 2018.
JP Morgan and Morgan Stanley acted as advisors for the operation.
Rafael Villaseca Marco, the Chief Executive Officer of Gas Natural Fenosa, said:
“GNDB is a ‘premium’ asset in the Spanish gas sector and an essential part of our investment strategy. We are very excited about partnering with two long-term investors of recognised standing in the infrastructure sector and we will continue to invest in greater expansion for the gas network in Spain, maintaining high operational effectiveness and customer service quality;.
Christian Fingerle, Investments Director of Allianz Capital Partners, said:
“GNDB represents an attractive opportunity for our clients and is fully in line with our strategy to invest in ‘core’ infrastructure assets. We are very pleased to become part of this new partnership with GNF as a leading international energy group and we hope to further strengthen our relationship with GNF and CPPIB, and support the ongoing success of this high-quality business”
Cressida Hogg, Head of European Infrastructures of CPPIB, added:
“GNDB is a ‘core’ infrastructure asset that suits our infrastructure asset portfolio very well, adding a stable long-term generation source to the CPP portfolio. We hope to consolidate a lasting partnership with GNF and Allianz in this high-quality global business, and add to our investments in Spain.”
Gas Natural Fenosa is a leading multinational group in the energy sector, and a pioneer in gas and electricity integration. Operating in over 30 countries, the company provides its services to almost 22 million customers on all five continents and manages a total installed capacity of 15.5 GW with a diverse portfolio of power generation technologies.
GNDB is the largest natural gas distribution company in Spain. The company manages a distribution network of close on 53,000 km to supply natural gas to over 5.3 million connection points in almost 1,100 Spanish towns and cities. Besides its gas distribution activities, which include regulated services such as inspections, gas meter rental and other services, the company also administers a gas transport network of 1,255 km and 2,249 km of network with almost 244,000 LPG connection points.
About Allianz Capital Partners
Allianz Capital Partners is the alternative investments manager of the Allianz Group. With offices in Munich, London, New York and Singapore, Allianz Capital Partners manages approximately 19 billion euros in alternative assets. Investment is focused on infrastructures, renewable energies and private capital funds. ACP’s investment strategy is aimed at generating attractive, long-term and stable returns, while also diversifying the global investments portfolio of the insurance companies that make up the Allianz Group.
The Allianz Group is one of the largest insurers and asset managers in the world with over 86 million retail and corporate clients. Allianz clients benefit from an extensive range of personal and corporate insurance services that range from property insurance, life insurance and health insurance to credit insurance assistance services and global insurance for companies. Allianz is one of the largest insurers in the world, managing over 650 billion euros on behalf of its insurance clients, while our asset managers Allianz Global Investors and PIMCO manage 1.3 trillion additional euros of third-party assets. Thanks to our systematic integration of environmental and social criteria into our business processes and investment decisions, we maintain a leading position on the Dow Jones Sustainability Index. In 2016, over 140,000 employees in over 70 countries achieved total revenue of 122 billion euros and an operating profit of 11 billion euros for the group.
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organisation that invests surplus funds from the Canada Pension Plan (“CPP”) to cover the current payments of its 20 million contributors and beneficiaries. In order to create a diversified asset portfolio for CPP, CPPIB invests in public and private companies, real estate assets, infrastructures and fixed income instruments. Based in Toronto, it also has offices in Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and Sydney. CPPIB is governed and managed independently from the Canada Pension Plan (“CPP”) and operates as an extension of governmental bodies. At 31 March 2017, the assets owned by the CPP fund amounted to 316.7 billion Canadian dollars.
Scope and subject: Corporate, Financial, Gas Business
Barcelona, 3 August 2017