CEZ and CVC Capital Vie for 55% Stake in Czech GasNet Amid Energy Transition

Czech power utility CEZ and private equity group CVC Capital Partners are planning to place competing bids next week for Czech gas distribution network GasNet, two sources close to the talks told Reuters.
GasNet, owned through Czech Gas Network Investments (CGNI) by a consortium led by Macquarie Asset Management and including British Columbia Investment Management Corporation and Allianz Capital, covers 80% of the country’s gas distribution through a network of 65,000 km (40,000 miles) of gas pipelines.

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Macquarie and the Australian Retirement Trust are selling a 55% stake, according to the sources, who spoke on condition of anonymity.
The current shareholders paid 1.8 billion euros ($1.96 billion) for just over a 50% stake in 2019 to take control of the company.
Bids are due on Jan. 26, the sources said, adding that Morgan Stanley is leading the process.

Macquarie Asset Management, CEZ, CVC and GasNet declined to comment.

Reuters reported in August 2023 that 70%-state-owned CEZ was interested in the asset to help its expansion into gas, a transition fuel in the move to green energy.

CGNI had revenue of 13.98 billion crowns ($616.08 million) in 2022 and earnings before interest, tax, depreciation and amortisation of 9.18 billion crowns. Operating profit for the first half of 2023 was 957 million crowns, down 41% year-on-year.

An important factor for the firm’s outlook is gas consumption volumes, which fell to around 7.5 billion cubic metres (bcm) last year from around 9 bcm in the years before Russia’s invasion of Ukraine in 2022.
Some additional volume may come from new gas-fired power and heating sources as coal is phased out, and the firm may have a future in hydrogen, industry experts have said.
GasNet’s profitability will also depend on upcoming decisions by national regulator ERU on profits permitted in the gas sector for 2026-2030. In the current five-year period, the allowed profitability measured by weighted average cost of capital, was set at 6.43%. ERU declined to comment.

CGNI has 1.6 billion euros in outstanding bonds due in 2027, 2029 and 2031, and 6.75 billion crowns in bonds due 2026. Its net debt stood at 53.1 billion crowns at the end of 2022.

Source: Reuters

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