Bidding war for energy network

Published on Sunday 16 August 2009 21:14

A FIERCE bidding war is expected to break out over the £4bn UK network arm of French energy giant EDF with Scottish and Southern Energy (SSE) understood to be among the contenders.

City sources say EDF has enlisted Deutsche Bank and Barclays to manage the auction, which is expected to begin next month.

A spokeswoman for EDF said the company is reviewing possible asset disposals.

However, a number of parties are already thought to be preparing bids for the electricity distribution network, which supplies power to almost eight million British homes.

There is speculation that SSE will join forces with two Canadian pension funds, Borealis Infrastructure and Ontario Teachers' Pension Plan, to make an offer. A spokesman for SSE yesterday refused to comment.

If it does proceed, the SSE-led consortium is expected to face tough competition for the assets. Other names associated with a potential bid include the Abu Dhabi Investment Authority and an infrastructure group owned by Asia's richest man Li Ka-shing. However, City sources suggest most bids will be made as part of a consortium as any deal is likely to require an equity injection of as much as 1.4 billion.

Paris-based EDF is understood to be keen to reduce its 24.5bn (21.2bn) debt pile after parting with 12.5bn for British Energy last year. The network sell-off would mark the biggest infrastructure deal seen in Britain since the takeover three years ago of BAA by Spain's Ferrovial.