Renewable Energy

Macquarie defends franchise with £8bn Thames win

17 Oct 2006

The Australian bank is paying a massive price to see off the Qataris and maintain its dominance of this kind of infrastructure investing. The multiples are higher than recent water deals, yet the risks are much higher. Delivering the promised returns could be a challenge.

Will bidders fight for AWG?

2 Oct 2006

A group of infrastructure funds are forking over £2.2bn for the UK water company, which is nearly a 30% premium to RAV. Even so, investors still expect a dogfight to break out over AWG. But it s hard to see how a counter bidder could go much higher.

VW’s Scania conflict needs careful handling

14 Sep 2006

The German group s 34% stake in the Swedish truckmaker and its boss role as Scania s chairman mean it could swing MAN s hostile bid. The worry is that VW may gain more than other shareholders because it may inject its own truck business into MAN and be paid in shares.

Ofwat sticks another spoke in Thames Water sale

23 Aug 2006

The UK water regulator has already told the water company s owner, Germany s RWE, it can t sell to a rival. Now it is warning that it doesn t want a bidder to load too much debt on Thames. That doesn t rule out a buyout, but may reduce the price.

Thames Water £7bn auction impaired by regulators

16 Aug 2006

Poorly run companies deserve the ultimate market sanction takeover by a bettermanaged competitor. Badly managed Thames Water is now for sale. Regulators are doing a disservice by only allowing financial bidders for the group.

Veolia – victim or villain?

2 Mar 2006

Did the French water group pull out of its joint bid with Italy s Enel for French utility Suez because it was nobbled? Or was it offered something juicy in return?

Bouygues stock looks pricey

23 Nov 2005

Shares in the French conglomerate have risen by a third since June on hopes that it will sell its prize mobile telecoms unit. But a sale looks unlikely while Telefonica remains sidelined. And Bouygues appetite for acquisitions may resurrect its historic discount.

RWE right to consider E15bn water spin-off

25 Oct 2005

A float would easily attract outside investors, and would give greater transparency to the value of the German utility s water assets. That would be a welcome strategic shift for RWE. But unless it can convince otherwise, it should return the proceeds to shareholders.

Utilities stocks start to crumble

22 Feb 2005

A more convincing explanation is the sector s unwarranted premium to the market. Yesterday s 3% fall in European utilities stocks has been widely blamed on the threat of higher longterm interest rates.

Is Electrabel the cheapest European utility?

14 Dec 2004

The conventional wisdom is that the Belgian utility is too expensive for parent company Suez to consider buying out minority shareholders. But make a few sensible adjustments, and Electrabel looks dead cheap.

Vivendi Universal sells 15% of Veolia

9 Dec 2004

The deal has been cleverly structured to preempt an overhang of stock when options over the shareholding expire later this month. VU will make a big capital gain that can be offset against tax losses. This will cut pressure on it to make more disposals for tax reasons.

UK power may be better bet than water

30 Nov 2004

Although the regulators seem to be allowing a higher return to water companies than power distributors, that s not the whole story. Water companies actually have higher hurdles to leap to hit their performance targets. So any generosity could turn out to be illusory.

Bouygues reaches watershed

15 Nov 2004

The French conglomerate has sold its water business for E1bn. That is a wise move. Yet Bouygues faces little pressure to break up its ungainly business structure. This doesn't mean it shouldn't.

Scottish Power bodes ill for European utilities

10 Nov 2004

Utilities are trading at a premium to the broad market yet utilities are a mature business. This makes no sense. Scottish Power s problems ram home growth risks. Either utilities are overpriced or European markets are cheap.

Northumbrian results stick it to private equity

9 Jun 2004

The UK water company slipped through CVC s hands when a public group bought the company and immediately floated it. One year on, its shares have risen 35% and paid out 8% on the float price including the final dividend. Sometimes greed doesn t pay.

UK water companies near regulatory showdown

7 Jun 2004

But while it may be lenient on returns, the regulator might crack down on capital structures and efficiency. Investors should be wary. The last fiveyear regulatory review caused water stocks to collapse. The regulator has hinted that this one will be easier.

Private equity look for quick exits

21 May 2004

The likes of CVC and, reportedly, Blackstone are pushing out big IPOs, regardless of choppy markets. That's partly because they bought assets on the cheap. But it's hard to shake fears that the smart money doesn't trust the recovery.

Guy Hands makes £1bn approach for Pennon

17 May 2004

This isn't really about water, but who gets to consolidate the UK waste management industry. Hands wants to break up a potential deal between Pennon and a rival. This is a clever move, but it is too early to say if it will pay off.

Italian minorities dealt another blow

6 May 2004

This time, it is not a private investor that s putting the screws on minority shareholders. The culprit is Milan s local government. If public authorities set such bad examples, what hope is there for Italy to clean its act up?

Spain opens the door for energy M&A

18 Mar 2004

There are signs that the new government will smile on deals in the energy sector, such as a Gas Natural takeover of an electricity company. The interesting question is how the government would react if this triggered interest by foreigners.