Total Said to Hire Banks to Sell $3 Billion Gas Network
Total SA (FP), Europe’s third-largest oil producer, is exploring a sale of its TIGF natural-gas network in France in a transaction that may fetch about 2.5 billion euros ($3.1 billion), according to two people familiar with the process.
The French company is working with Goldman Sachs Group Inc. (GS) and Lazard Ltd. (LAZ) to seek buyers for the transmission network, said the people, who asked not to be identified because talks are private. Potential bidders include companies such as Enagas SA (ENG), the operator of Spain’s natural-gas grid, infrastructure investors including Global Infrastructure Partners Ltd., and also pension funds, one of the people said. No final decision on selling the asset has been made.
Energy companies from Total to Germany’s EON AG are selling their transmission networks as they focus on higher-margin investments and seek to cash in on demand from infrastructure investors. The European Union has also been pressing utilities and natural gas companies to separate from their networks in a bid to open up markets.
TIGF’s 5,000 kilometers of pipeline in southwestern France transports about 12 percent of the country’s natural gas and had 2010 revenue of 370 million euros, according to its website. A sale may kick off in the fourth quarter, one of the people said. Madrid-based Enagas may consider buying TIGF because it could transport natural gas from the Iberian peninsula, the person said.
Total began a series of asset sales and purchases in 2010, seeking to raise energy production. The French oil company in 2011 agreed to sell its 6.4 percent stake in the Norwegian Gassled pipeline network to Silex Gas Norway AS, owned by German insurer Allianz SE. (ALV)
EON, Germany’s largest utility, agreed in May to sell a network of natural-gas pipelines in the country to a group led by Macquarie Group Ltd. (MQG) for 3.2 billion euros, shoring up its funds as nuclear earnings decline. The buyers for Open Grid Europe GmbH, Germany’s biggest gas-transmission system, also included a fund of German reinsurer Munich Re, the Abu Dhabi Investment Authority’s Infinity Investments and British Columbia Investment Management Corp.
Pension funds, insurers and sovereign wealth funds are seeking infrastructure investments for more stable cash-flow and earnings as Europe’s sovereign debt crisis and global economic concerns roil equity and bond markets.
Officials at Total, Goldman Sachs and Lazard declined to comment on the process. Officials at Global Infrastructure Partners were not immediately available, nor were officials at Enagas after normal business hours.
Reuters reported Total was planning to sell the gas network earlier today.
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