Enel, the sole suitor for Electrica

Italian state-run energy group Enel is the only contender left in the race for the privatisation of Electrica Banat and Dobrogea, although the privatisation procedures have not even reached the final bidding stage.

Enel Group submitted preliminary non-binding bids for Electrica Banat and Dobrogea. The Negotiation Commission is now analysing the bids submitted so far together with the representatives of the consultant hired, BNP Paribas (France) in order to begin negotiations with the bidder, as announced by the officials of the Office for State’s Interests and Industrial Privatisation (OPSPI). The short-list of pre-qualified investors also included Public Power Corporation (Greece) and EVN AG (Austria), which quit.

Electrica’s privatisation, supposedly an over one billion euro business is therefore starting slow, given the lack of major interest from Western companies. The top private players on this market like Union Fenosa (Spain), RWE, E.ON or ENBW (Germany) have not even showed interest in this acquisition. Why is that? Because of the unstable international business climate. Furthermore, the Romanian initiative is too late, as RWE and E.ON have already bought energy and gas distribution companies in the Czech Republic, Hungary or Poland since as early as 1994.

Information close to the negotiations shows the Italians have also submitted a financial offer, which is not final.

In order to become the owner of the two branches, Enel will need to buy 24.62% in each of them and come to hold 51% following a capital increase.

This means that were the transaction for Electrica Banat closed at the par value of the shares, Enel would have to pay some 19.7 million euros for 24.6% and then invest another 43 million euros to attain 51%, which would entail a total investment of 62 million euros. Electrica Banat’s share capital is worth 80 million euros.

Both branches could therefore be bought for a little more than 100 million euros, if the takeover was conducted at the par value of the shares.

Enel might invest some 1.2bn euros in these companies over the next 15 years, and is interested in the privatisation of the gas distribution and in investments in the Romanian hydropower plants, as well, according to the Ministry of Economy and Trade.

Enel’s chairman Paolo Scaroni, yesterday met with Romanian minister of Economy and Trade Dan Ioan Popescu. The hydro projects in Romania Enel is interested in required about 500 million euro investments, with the establishment of a joint venture with Hidroelectrica discussed.

Enel’s consultants for the Electrica privatisation are Credit Suisse First Boston, Musat & Asociatii law firm and Ernst & Young Italy.

The two Electrica branches jointly account for about 19% of Electrica’s energy sales, which totalled 1.8bn euros last year.

adrian.mirsanu@zf.ro