Candover Investments, the UK private equity house currently investing from the E2.7bn Candover 2001 fund which closed in June 2002, has entered into exclusive talks with Swiss engineering group ABB over the sale of its oil, gas and petrochemical unit.
ABB is looking to raise up to E1.2bn for the unit, which according to Reuters will be used to pay down a $1.5bn secured liquidity loan. The group is also planning to reduce its debt burden to $6.5bn by the end of 2003.
Candover, which declined to comment on the negotiations, has reportedly secured financial backing from Bank of Scotland, Canadian bank CIBC and Credit Suisse First Boston, which will provide the debt element of the deal’s financing.
The deal would be Candover’s second foray into the oil and gas sector this year, following its acquisition of Halliburton unit Wellstream, a manufacturer of flexible pipe applications for the offshore deepwater oil and gas business. The transaction was valued at E123m, with debt and mezzanine financing again provided by Bank of Scotland.
Following the Wellstream acquisition, Candover investment manager Nils Stoesser said the firm was likely to make further acquisitions in the oil and gas sector. Speaking to Dow Jones in March, he said the high oil price would “drive development spending in the sector, allowing companies with leading technologies and market positions to grow their businesses.”
Wellstream is Candover's only direct holding in oil and gas at present following last year’s sale of PII, a global pipeline integrity services company, to GE Power Systems.