Energy investors bid for EDF electricity distribution network

The Abu Dhabi Investment Authority (ADIA) has collaborated with Canadian Pension Plan (CPP) to create a joint £5 billion proposal for EDF’s electricity network, which powers 7.9 million houses in the UK.

Owned by the emirate, ADIA is one of the largest sovereign wealth funds in the world with an estimated asset of £219 billion. Goldman Sachs bankers and advisory company Lexicon Partners have been assigned to advise the group on its bid.

Earlier in October 2009, EDF began the process to assess ownership alternatives for its electricity distribution business in the country, which is in line with the firm’s plan to cut its financial debt by €5 billion by 2010. The energy firm however will still keep its power supply and generation activities in Britain.

There are many other investors bidding for EDF’s electricity network. For example, Scottish and Southern Energy is presently working with Borealis, another pension fund from Canada. Moreover, National Grid is also planning to participate and has already appointed Morgan Stanley to work on a bid.

Meanwhile, several infrastructure firms have shown interest as well. Cheung Kong Infrastructure (CKI), a firm run by Li Ka-shing, Asia’s wealthiest man, is believed to have assigned Royal Bank of Scotland to give advice on the deal. Moreover, bankers informed that Macquarie, the Australian financier that carried out several of the world’s largest infrastructure deals, is now preparing to submit a bid.

The purchase of EDF’s electricity network is expected to give a massive boost to the infrastructure market. Barclays Capital, BNP Paribas and Deutsche Bank have been hired to run the auction.