The auction of a district energy business in the U.S. that includes a 256 MW cogeneration plant in Massachusetts is heating up as the deadline for final round bids approaches.
Bank of America Merrill Lynch is taking final offers for District Energy Networks, a subsidiary of Veolia North America, on July 19, says a project finance banker away from the deal.
The company is projected to generated $90 million of Ebitda and can be expected to trade at around 12 times that (PFR, 4/10).
“There might be up to five bidders in the second round and my understanding is that there were 20 or so first-round bidders who were all pretty tightly banded in terms of enterprise value,” says another project finance banker away from the process.
Veolia recently agreed to buy I Squared Capital Advisors’ 49% interest in the 256 MW Kendall Cogeneration Station in Cambridge, Mass., adding it to the 51% stake it already owns through District Energy Networks, which will become the plant's sole owner (PFR, 5/7).
This will presumably have to be taken into account by prospective bidders.
Macquarie Infrastructure Corp., Algonquin Power & Utilities and Axium Infrastructure are among the suspected final-round bidders, says an investment banker following the process. Other names being floated as likely suspects include Engie, Brookfield Renewable Partners and General Electric.
“Everyone is expecting Brookfield and Engie but I’m not sure if they’re happy with the merchant exposure,” says the first banker. "Enwave makes sense," he added.
“We have a group of projects both in development and under consideration, but I’m not in a position to provide confirmation or details on them at this stage,” an Engie spokesperson in Houston tells PFR.
Engie is already in final negotiations to acquire another similar business, the Nashville District Energy System, having won a competitive privatization process (PFR, 4/23).
BAML's Mike Dunne, who is leading the auction process for District Energy Networks, and a Boston-based spokesperson for Veolia, did not respond to inquiries by press time.
A spokesperson for Macquarie in New York and Brookfield in Toronto declined to comment. Spokespeople for Algonquin and Axium did not respond to inquiries by press time.