HEAG Plans More M&A After HSE Deal Tops 2012 Renewables Ranking

HEAG Holding AG, whose $356 million buyout of HEAG Suedhessische Energie AG was the biggest private-equity deal in clean energy last year, plans to sell a stake in the utility as early as 2014 to help fund more purchases.

HEAG may reduce its ownership in HSE to about 60 percent from 93 percent by selling to local municipalities, financial investors or strategic investors in the energy or engineering industries, said management board member Klaus-Michael Ahrend.

The company’s agreement to buy EON AG’s 40 percent stake in their HSE joint venture topped private-equity deals last year, beating acquisitions by Banco Votorantim SA, Grupo Oleoplan and Credit Suisse Group AG, according to data compiled by Bloomberg. It helped German investors defy a global slowdown in clean-energy investment, which slumped to the lowest since 2006 as companies failed or were sold at a loss.

“Investments in renewable assets are highly profitable in Germany because of the country’s clean-energy feed-in tariff,” Ahrend said in an interview, referring to the above-market rates paid to producers of renewable power. “We’ve had inquiries in the past from large international banks.”

Should it sell a stake in Darmstadt-based HSE, HEAG may use the cash to cut debt and fund purchases of clean-energy projects and smaller technology businesses, strengthening its portfolio of about 160 companies, Ahrend said. HEAG sees growth in onshore wind and energy-efficiency consulting, where HSE already has worked with Siemens AG’s lighting unit Osram, board member Markus Hoschek said in the same interview.

Energy Shift

Germany is transforming its energy market to more than triple the share of renewables in the power mix by 2050 while phasing out nuclear generation. It plans to build offshore wind farms that could cover an area about six times the size of New York City and raise renewables output to about 40 percent of electricity production by 2020, from about 25 percent now.

“Investors in Germany, including pension funds that look for long-term returns, are confident about the market because you have political security with the energy switch,” Hoschek said.

HSE, a utility with 2,500 employees and sales of 2.3 billion euros ($3.1 billion) in 2011, has a 25 percent stake in the 1 billion-euro Global Tech I offshore wind project in the German North Sea, according to Hoschek.

Global investment in renewable-energy sources fell 11 percent to $268.7 billion last year from a record $302.3 billion in 2011, according to data from Bloomberg New Energy Finance.