CEZ and CVC Capital Partners are set to submit competing bids for a significant stake in GasNet, the Czech Republic’s primary gas distribution network, reported Reuters, citing sources.
GasNet is owned via Czech Gas Network Investments (CGNI) by a consortium led by Macquarie Asset Management (MAM).
The consortium includes British Columbia Investment Management Corporation and Allianz Capital Partners.
The deadline for the bids is set for 26 January 2023, with Morgan Stanley overseeing the sale process.
GasNet, commanding an 80% market share in the Czech gas distribution sector, is a critical asset, covering all regions except Prague and South Bohemia.
It caters to 2.3 million customers through a pipeline network spanning 65,000km.
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According to sources, up to a 55% stake in GasNet is up for sale.
The financial performance of GasNet is a key consideration for potential investors.
In 2022, CGNI reported revenues of Kč14bn ($616.08m) and earnings before interest, taxes, depreciation, and amortization (EBITDA) of Kč9.18bn.
However, the first half of 2023 saw a 41% decline in operating profit year-on-year, totalling Kč957m.
This downturn reflects the broader challenges faced by the energy sector, including reduced gas consumption volumes, which fell to approximately 7.5 billion cubic metres (bcm) in 2023 from around 9bcm in 2022.
Industry experts have noted that GasNet’s future growth could be influenced by the Czech Republic’s energy transition, including the potential for new gas-fired power and heating sources as coal is being phased out.
Additionally, the company may play a role in the emerging hydrogen market.
Furthermore, the profitability of GasNet will hinge on the decisions of the national regulator, ERU, regarding profits permitted in the gas sector for the 2026–30 period.
In the current five-year period, the allowed profitability, measured by the weighted average cost of capital, was set at 6.43%.
MAM, CEZ, CVC, GasNet and ERU declined to comment on the development, reported the news agency.