FRANKFURT/DUBAI: Russian billionaire Mikhail Fridman has teamed up with other investors to bid for German utility RWE’s oil and gas unit DEA, three people familiar with the deal said.
“A Fridman-led consortium is preparing to hand in a bid for DEA by the Christmas deadline”, one of the people said.
Fridman is acting through his investment vehicle L1 Energy, another of the sources said.
RWE, suffering from loss-making power plants, a boom in renewable power and ¤30.8bn ($41.5bn) in net debt, said in March it planned to sell DEA to save billions of euros it would otherwise have to invest in exploration and production.
Fridman, flush with cash after the sale of Anglo-Russian oil venture TNK-BP to state-controlled Rosneft, has set up a new investment vehicle that plans to pump as much as $20bn into energy investments over the next three to five years.
The energy fund, called L1 Energy and run by Fridman’s partner German Khan, is still in its early stages and has yet to make any investments.
DEA could make a good strategic fit for L1 Energy as it would enable large-scale diversification away from Russia. Fridman has a track record of buying assets cheaply and seeking to add value.
US private equity firm KKR has teamed up with the international arm of Kuwait Petroleum Corp to jointly bid for DEA, which could reap a valuation of up to ¤5bn, sources familiar with the matter said earlier this month.
BASF’s Wintershall has said in the past that it is interested in the asset. It will not tie up with its Russian partner Gazprom in the bidding, two people familiar with the company’s plans said.
Separately, investors such as Blackstone and utilities like Britain’s Centrica are seen as potential bidders.
By contrast, Qatar Petroleum International’s (QPI) interest in DEA has cooled as Qatar had backed overthrown Egyptian President Mursi. Many of DEA’s assets are in Egypt.
RWE declined to comment, as did Stan Polovets, lead director of L1 Energy and CEO of AAR.
Reuters
