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UPDATE 2-Czech EPH sells stake in infrastructure assets to Macquarie
October 17, 2016 / 11:12 AM / a year ago

UPDATE 2-Czech EPH sells stake in infrastructure assets to Macquarie

* Macquarie takes 30 pct share in EPH’s infrastructure arm

* Deal set to finalise in Q1 2017

* CEO Kretinsky buys out partners to become main EPH owner (Adds CEO comments, more on EPH ownership changes, details)

By Jason Hovet

PRAGUE, Oct 17 (Reuters) - Czech privately-held energy group EPH has agreed to sell a 30 percent stake in its EP Infrastructure (EPIF) unit to an investor group led by Macquarie Infrastructure and Real Assets, EPH said on Monday.

EPH has grown into one of central Europe’s biggest energy firms and the deal marks the first major investment in its business by global investors hunting yield.

The transaction also gives EPH cash to buy back some of its stock and consolidate most of its ownership under Chief Executive Daniel Kretinsky, who has set a strategy of taking on traditional assets dumped by European peers shifting to cleaner renewable energy.

EPH created EPIF by carving out businesses that have long-term contracts and stable profits such as gas and power distributors, gas storage and transmission, and heating assets.

It is separate from EPH’s power generation asset group that has bought coal-fired plants in Britain, Germany and Italy in recent years.

EPH had revenues of 4.6 billion euros ($5.2 billion) in 2015, with EPIF its biggest earner. EPIF includes EPH’s flagship 49 percent stake in Slovak gas pipeline operator Eustream, which delivers Russian natural gas via Ukraine to the European Union and European gas to Ukraine.

EPH had scrapped plans for an initial public offering of EPIF in April. Sources said it then started talks with Macquarie.

The company did not disclose financial details on Monday. Closing is expected in the first quarter next year.

CONTROL

EPH will use proceeds from the Macquarie deal to buy out minority shareholders, leaving 41-year-old Kretinsky as a 94 percent owner with other management holding the rest.

The related shareholder deals value EPH at 5 billion euros, the company said. The selling parties are Patrik Tkac of Czech-Slovak bank J&T and small shareholders who are part of J&T private equity.

Kretinsky, a lawyer who started his career at J&T, has helped build EPH into a company that produced 101 terawatt hours of electricity last year, more than majority state-owned Czech group CEZ, central Europe’s biggest listed utility.

EPH has been snapping up coal, gas and nuclear power assets, betting they will remain strong energy sources and pay off once electricity prices rise from lows.

Recent purchases include Eggborough in Britain in 2014, E.ON’s gas and coal-fired plants in southern Italy in 2015, and, together with private equity firm PPF Investments, Vattenfall’s lignite plants in Germany this year.

EPH is also set to become majority owner of Slovakia’s top electricity producer Slovenske Elektrarne, part of a deal agreed in December 2015 with Enel of Italy.

Kretinsky, speaking on Monday at an energy conference in Slovakia, said EPH wanted to grow in Italy and Britain and seek opportunities in other developed European markets.

“Part of the current strategy is, if it is possible under reasonable conditions, to strengthen further our presence in the European sector of electricity production from thermal (coal) sources,” he said.

$1 = 0.8928 euros Additional reporting by Robert Muller and Jan Lopatka, and Tatiana Jancarikova in Bratislava, Editing by Louise Heavens and Mark Potter

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