Energia owner calls final bids as KKR and Canadian Pension Plan circle

Energia Group’s owner, US investment firm I Squared, has called for final offers for the Irish power company on Monday, sources say.

Three bidders are understood to remain in the race.

New York-based private equity group KKR is among the suitors said to have been working on a binding bid for the electricity and gas group, which was put on the market earlier this year with reported estimated enterprise value of €2.75 billion, including net debt.

The Canadian Pension Plan Investment Board (CCPIB) and its UK power supply business, Octopus Energy, are also reported to have been doing work on a joint offer in advance of the deadline.

The identity of the third party that is expected to put in a final-round offer is unclear.

Japanese trading house Itochu and Czech energy firm EPH, which is controlled by businessman Daniel Kretinsky, were among shortlisted bidders selected after an initial bidding round in June. Mr Kretinsky is co-owner and president of football club Sparta Prague and a major shareholder of West Ham United.

Australian financial services giant Macquarie, French private equity firm Ardian and Spanish infrastructure investor Asterion were also involved in the process at one stage.

A spokeswoman for I Squared and a spokesman for Energia declined to comment on the current stage of the process. A preferred bidder is expected to be identified soon.

I Squared, founded 13 years ago by former executives at Morgan Stanley’s infrastructure arm, acquired Energia – then known as Viridian – in 2016 from Bahrain’s Arcapita Bank for €1 billion. Arcapita had owned the business for almost a decade.

The US firm subsequently sold a minority stake in Energia to an unknown investor the following year and set up a holding company over the business in the Cayman Islands.

I Squared has made two unsuccessful efforts to sell the company before now, in 2018 and 2020.

Energia, led by chief executive Ian Thom, reported earlier this month that its earnings before interest, tax, depreciation and amortisation (Ebitda) in its customer solutions business – which supplies electricity and gas to 898,500 households and businesses on the island – declined by 31 per cent on the year to €30.2 million as its margins contracted in the three months to June. That is its fiscal first quarter.

Ebitda in the renewables business, which owns 358 megawatts (MW) of wind assets and purchases electricity from 1.19 gigawatts (GW) of third-party green energy producers, fell 9.5 per cent to €18.1 million.

Its flexible generation unit, mainly made up of two combined cycle gas turbine plants in Huntstown, north Co Dublin, with a total capacity of 747MW, posted a 47 per cent slump in earnings, to €7.8 billion.

An Bord Pleanála gave Energia permission in March to build a data centre in Huntstown in partnership with tech giant Microsoft, adding to the investment case for parties circling the group. Energia also has plans for more than 1,200MW of solar energy.

I Squared officially started the Energia sale process after planning permission on the data centre came through.

I Squared hired investment advisers Barclays, Morgan Stanley and Santander last year to manage the Energia sale, dubbing it Project Havana.

Energia handed €40 million of dividends to its owners in April. That brought brings total distributions to more than €540 million since the I Squared bought Energia nine years ago.

The group’s plans for solar energy, onshore and offshore wind and battery-storage projects will require significant fresh equity investment from its future owner alongside project finance.