Fortum $6.9 Billion Swedish Sale Said to Draw CKI, Borealis

Fortum Oyj (FUM1V)’s sale of its Swedish electricity grid is drawing interest from bidders including billionaire Li Ka-Shing’s Cheung Kong Infrastructure Holdings Ltd. and Canadian pension investor Borealis Infrastructure Management Inc., people familiar with the process said.

Groups led by Macquarie Group Ltd. (MQG) and 3i Group Plc (III) are also expected to bid for the network, which may be valued at 4 billion euros ($5.54 billion) to 5 billion euros, the people said, asking not to be identified discussing a private matter. The sale process is scheduled to start in the second quarter, the people said.

Infrastructure assets such as power grids, pipelines and water systems are increasingly drawing attention from pension funds and other investors thanks to their stable, predictable earnings. Cheung Kong Infrastructure, a Hong Kong-based company controlled by Asia’s richest man, already owns power and water networks in the U.K. and Australia.

Fortum agreed in December to sell its Finnish grid to a company part-owned by Borealis for about $3.5 billion, part of a plan to exit network assets in favor of a focus on generators. The Espoo, Finland-based company said in December it’s preparing a possible sale of its distribution networks in Sweden and Norway.

Photographer: Simon Dawson/Bloomberg

Power lines stand near Boden, Sweden. Infrastructure assets such as power grids, pipelines and water systems are increasingly drawing attention from pension funds and other investors thanks to their stable, predictable earnings. Close

Power lines stand near Boden, Sweden. Infrastructure assets such as power grids,... Read More

Close
Open
Photographer: Simon Dawson/Bloomberg

Power lines stand near Boden, Sweden. Infrastructure assets such as power grids, pipelines and water systems are increasingly drawing attention from pension funds and other investors thanks to their stable, predictable earnings.

Cheung Kong Infrastructure (1038) and Macquarie also were among bidders for Fortum’s Finnish grid, people familiar with that process have said.

Fortum shares fell as much as 0.8 percent in Helsinki trading before erasing the loss and rising 0.2 percent to 16.67 euros at 10:29 a.m. local time.

Revenue Flat

Fortum’s revenue from power distribution was almost unchanged at 1.1 billion euros last year, data compiled by Bloomberg show. Earnings before interest, taxes, depreciation and amortization at the business rose to 550 million euros from 526 million euros the year before.

Representatives for Fortum, Macquarie, 3i, and Borealis’s parent, the Ontario Municipal Employees Retirement System, declined to comment. Wendy Tong Barnes, a spokeswoman for Cheung Kong Infrastructure, wasn’t immediately available to comment.

Cheung Kong Infrastructure is choosing banks to advise it on a bid for the Fortum assets, one of the people said.

As part of a consortium, Cheung Kong Infrastructure bought U.K.’s Northumbrian Water Group for $7.5 billion in 2011. It also joined a group of investors to purchase three British power networks for $9 billion in 2010, according to data compiled by Bloomberg.

Borealis, advised by Deutsche Bank AG on its Finnish deal, is an arm of OMERS which invests on behalf of government staff in Canada’s most populous province.

To contact the reporters on this story: Zijing Wu in Hong Kong at zwu17@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net; Brett Foley in Melbourne at bfoley8@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net Aaron Kirchfeld

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.