NEW YORK CITY (dpa-AFX) - UK-based investor 3i Infrastructure Plc (3IN.L), a subsidiary of private equity and venture capital 3i Group Plc (III.L), on Friday said a company-led consortium agreed to buy Swedish state-owned utility Vattenfall AB's electricity distribution and heat businesses in Finland for about 1.54 billion euros. The transaction is expected to close in the first quarter of 2012.
The consortium, LNI Acquisition Oy, will buy Vattenfall Verkko Oy - Networks Finland, and Vattenfall Lämpö Holding Oy, a district heating supplier, from their parent.
In the consortium, 3i Infrastructure and 3i Group together hold 45 percent share, GS Infrastructure Partners, part of Goldman Sachs Group, Inc. (GS), holds 45 percent share and Finnish group Ilmarinen Mutual Pension Insurance Co. holds the remaining 10 percent share.
3i Infrastructure noted that the company and 3i Group are investing through 3i Networks Finland LP, a partnership in which they have taken 87 percent and 13 percent stakes, respectively.
LNI will fund the acquisition through a combination of equity and debt, and 3i Infrastructure will contribute 236 million euros in equity to the transaction.
Tampere-based Networks Finland is the second largest electricity distribution network in that country, serving around 400,000 customers in South West Finland, and has a 12 percent market share. Heat Finland operates a broad-based district heating and gas business.
There were media reports in October that Vattenfall had put these assets for sale and has approached potential buyers, as part of its plans to sell noncore assets to cut costs and reduce debt, amid Germany's decision to shut nuclear power plants by 2022.
In today's statement, Vattenfall said its Finnish electricity sales organisation as well as its hydro power operations will remain under its ownership.
Vattenfall CEO Øystein Løseth said, 'Whilst the divestment is a significant step in delivering our new strategic direction, focusing on our core business and markets in Sweden, Germany and the Netherlands, we will remain present in the Finnish market through our electricity sales and hydro power generation operations.'
In a separate deal on Tuesday, Vattenfall completed the sale of Gornoslaski Zaklad Energetyczny, Vattenfall's Polish electricity sales and distribution company, to Polish energy company Tauron Polska Energia S.A. for about 7.4 billion Swedish kronor.
3i Infrastructure has a diversified portfolio of infrastructure investments across the globe, with a focus on Europe and India. As of September 30, the company had a portfolio of 15 assets valued at 716 million euros and net assets of 1.03 billion euros.
3i Infrastructure is currently trading at 117.90 pence, up 0.30 pence or 0.26 percent in London, and 3i Group is at 171.90 pence, up 0.20 pence or 0.12 percent.
Copyright RTT News/dpa-AFX