GERMANY - A consortium of pension funds and insurance firms has acquired close to 75% of grid operator Amprion via MEAG, the asset manager for insurers Munich Re and ERGO. The insurers identified the price of its stake only as "low three-digit million" euros.
The vendor, RWE, will retain a 25.1% share in Germany's largest extra high-voltage electricity grid operator over the long term - an arrangement MEAG managing director Dieter Wolf said he favoured given the size of the deal.
"RWE will keep an important stake in the company and will continue to contribute operational expertise in managing and improving its performance, as well as in grasping potential benefits," he said.
Ulrich Scholz, an energy specialist at law firm Freshfields Bruckhaus Derringer's Cologne office, told IPE Real Estate the deal marked a departure from previous deal structures. To date, all utilities selling off their grid businesses had decided in favour of a total divestment of their grid assets.
MEAG's Wolf said the investment would provide the group of investors with "calculable and lastingly reliable returns" from the operation of the grid. He added that the German electricity market would prove attractive to pension funds and insurers because it offered long-term cashflows, limited correlation with other asset classes, high barriers to entry, irreplaceable physical assets, and an inflation hedge.
The German government's recent decision to exit nuclear power production - and to promote offshore windfarms - is expected significantly to boost the value of the grid infrastructure in the absence of sufficient wind energy to meet even a small percentage of domestic energy demand.
Electricity is just one of MEAG's domestic infrastructure investment targets. It plans to build up a €2.5bn portfolio over the next few years in renewable energies via a dedicated investment programme, focusing on solar and wind, but with potential investments in geothermal energy and biogas.
Wolf said the asset manager would assess risks drawing on the expertise in technology and location analysis built up by its reinsurance specialists.
Freshfields Bruckhaus Derringer partner Michael Schaefer recently told London investors that renewables had become "a thrilling market. People know something must happen because of the exit from nuclear power."