Iberdrola wants to add value to its network distribution business. To do this, the company is looking for an investor to acquire between 15% and 20% of i-DE, its subsidiary that specializes in managing electrical wiring networks. The goal is to raise about 3000 million to support its plans to grow in offshore wind energy.
Energy company Morgan Stanley has been tasked with evaluating and finding a buyer for a minority stake, according to La Información. Sources consulted by this newspaper indicate that the investment bank is looking into significant infrastructure funds to acquire this stake.
The first valuations issued by this investment bank raise the estimate to between 15,000 and 20,000 million for the total subsidiary. Everything will depend on the participation that will come at the end. Iberdrola’s sources declined to comment.
According to Iberdrola’s latest financial report, the network business accounted for 14,887 million in revenue in 2021, nearly 40%. The valuations Iberdrola handles are more than 10 times the EBITDA the subsidiary received in 2021, which was above 1,000 million. The idea is to replicate what Naturgy did with Nedgia, its gas distribution subsidiary. In 2018, it sold 20% of that company to a consortium formed by Allianz insurer and Canada’s largest pension fund, CPPIB, for 1,500 million. Nedgia has 5.3 million supply points and more than 51,000 km of networks.
i-DE is an ideal asset for this type of investor, who is looking for a secure business that guarantees a stable return. According to its website, this company owns 270,480 kilometers of power lines, which stretch across 10 autonomous communities and 25 provinces, in an area covering 190,000 square kilometers. It has developed an ambitious business plan, scheduled to be achieved before 2025, which includes a $2,869 million investment focused on smart grid deployment, electric mobility and sustainability.
For Iberdrola, the reason for launching this operation is to advance at the point where it has focused on its growth in recent years, offshore wind power. The company led by Ignacio Sánchez Galán is operating with the goal of getting between 1 and 3 gigawatts of floating wind capacity before 2030. It is part of the energy company’s strategic plan, which anticipates investments of up to 75,000 million by 2025 and 150,000 million by 2030 and will allocate more Half of these amounts are for renewable energy sources.
Iberdrola shuts down in 2021 with an installed capacity of 1,250 MW in offshore wind power. It has projects under development with a capacity of 7,000 MW, of which 2,600 MW are under construction. It is expected to enter into force in 2027 thanks to an investment of 30 thousand million. The United Kingdom, the United States and Japan hold most of these projects, while their eyes are set on upcoming auctions to be held primarily in Poland, Ireland, France and the United States, with Biden’s plan for renewed growth.
Progress in the sale of cogeneration
Iberdrola also has another divestment process underway. This is the sale of its cogeneration plants, which have a capacity of 300 MW and are worth 300 million euros. In a process coordinated by Lazard, which the company already tried in 2018, it has already received its first non-binding offers from investment funds and other competitors. The operation competes with another sale of cogeneration plants, Neolectra, which so far remains in the hands of venture capital fund ProA. In addition, last summer Ignacio Sanchez Galán proposed selling part of the offshore wind energy business, an operation that did not go beyond an idea.