Endesa commences sale of gas network

The Spanish utility has sent out teasers for the possible sale of its gas distribution network in a deal that could net it over €700m. The sale comes as E.On cancels the divestment of its Italian gas network after deeming the bids received too low.

Spanish utility Endesa – majority-owned by Italy’s Enel – has started marketing the possible sale of its Spanish gas network, a source familiar with the process told InfrastructureInvestor.com.

Teasers have been sent out to prospective bidders for the sale of Endesa’s 4,000-kilometre gas distribution network – which serves over 397,000 customers across Spain – as well as its gas transportation business, spanning over 800 kilometres of pipelines throughout the country.

Endesa’s gas business is said to have generated 2009 earnings before interest, tax, depreciation and amortisation (EBITDA) of about €58.4 million, Reuters reports. Assuming Endesa could get between 10x to 13x EBIDTA, it could sell the assets for between €584 million and €760 million. But the source suggested the latter figure was towards the more optimistic end of the assets’ enterprise value.

A consortium of French private equity firm AXA Private Equity and Italian fund F2i are sure to bid for the asset, according to the source. Carlyle Group, CVC Capital Partners, Macquarie, Magnum Capital and Valiance Capital are also likely to take an interest in the sale. They all reportedly expressed an interest in the sale of Gas Natural’s Spanish gas distribution network, sold earlier this year for €800 million to a consortium comprising Morgan Stanley and Portuguese energy group Galp Energia.

The AXA/F2i team and Valiance had also expressed interest in purchasing E.On’s Italian gas distribution network. A spokesman from E.On announced the cancelation of the sale yesterday, after the company failed to get an attractive price for its assets. E.On’s Italian gas network spans over 9,000 kilometres serving 620,000 customers.