Fortum Grid Sale Said to Attract CKI, Borealis, MacquarieJonathan Browning, Matthew Campbell and Aaron Kirchfeld
Fortum Oyj’s sale of its Finnish electricity grid has attracted interest from potential buyers including Hong Kong-based Cheung Kong Infrastructure Holdings Ltd. and Canada’s Borealis Infrastructure, according to people familiar with the talks.
They are competing with bidding groups led by Macquarie Group Ltd.’s European infrastructure unit and Hastings Funds Management Ltd., said the people, who asked not to be named because the talks are private. The grid may fetch about 2 billion euros ($2.7 billion) and a decision on the winner is expected by December, they said.
Infrastructure assets are attracting rising interest from institutional investors and pension funds because of their relative safety and steady cash flows. Espoo, Finland-based Fortum, the country’s largest utility, is weighing sales of its distribution networks in the Nordic region to allow it to focus on generating power.
Fortum also plans to sell its larger Swedish grid, which could be worth about 4 billion euros, next year, the people said. Some of the bidders for the Finnish unit may try to buy the Swedish grid as well, one of the people said. Investors have criticized the sale plan, saying it will leave Fortum more exposed to swings in demand.
Pauliina Vuosio, a spokeswoman for Fortum, said by phone the company is assessing future options for its power distribution unit assets and plans to conclude the assessment by the end of the year.
Representatives for Cheung Kong, Borealis and Macquarie declined to comment. Officials at Hastings couldn’t be immediately reached for comment outside of business hours.
Revenue from Fortum’s grids in Sweden, Finland, and Norway totalled 1 billion euros in the 12 months through September 2012, the company said in January.
Borealis, an arm of the Ontario Municipal Employees Retirement System, is teaming up with investors including First State Investments and Nordic pension funds, the people said. A representative for First State couldn’t be immediately reached for comment.
Cheung Kong, also known as CKI, is working with UBS AG on its potential offer, one of the people said. Founder Li Ka-Shing, Asia’s richest man, is seeking assets outside his Hong Kong base as economic growth slows in the city. The 85-year-old tycoon is also spinning off the city’s second-largest electric supplier in an attempt to raise as much as $5 billion, people familiar with the matter said in September.
The Wall Street Journal reported Cheung Kong’s interest earlier today.