ADIA joins bid for UK power asset

The Abu Dhabi Investment Authority is a partner in a bid for the UK electricity network of Electricite de France, a British newspaper reported.

DUBAI // The Abu Dhabi Investment Authority (ADIA), one of the world's largest sovereign wealth funds, is a partner in a bid for the UK electricity network of Electricite de France (EDF), a British newspaper reported. ADIA and the Canada Pension Plan are working on a joint bid of £5 billion (Dh29.32bn) for the network, the Sunday Telegraph said. An ADIA spokesman declined to comment. Goldman Sachs and the boutique advisory firm Lexicon Partners have been appointed to advise the consortium on its bid for the network, which supplies energy to millions of UK households, the paper said, citing unnamed sources.

Assets such as regulated power networks may be attractive to Gulf-based investors because of attractive valuations and their long-term strategic appeal, analysts say. "It's a low-risk profile asset with recurring, resilient cash flow attached to it. Such assets are definitely very attractive for Gulf investors," said Ali Khan, a director at Arqaam Capital in Dubai. "Aabar buying into Italian road toll company Atlantia is a prime example of how Gulf investors are moving into low-risk and resilient cash flow investments."

A successful sale of the network would provide a huge boost for infrastructure deals. EDF, Europe's biggest power generator, is selling its regulated electricity network in the UK, which distributes power to 7.9 million homes in the east and south-east of England. The company will retain its power generation and supply activities in the UK. Deutsche Bank, Barclays Capital and BNP Paribas have been appointed to run the auction.

There are several other bidders interested in the deal, including infrastructure buyout funds. Bankers following the situation also said National Grid is interested in the assets and has hired Morgan Stanley to work on a possible bid. Macquarie, Australia's largest investment bank, is also ready to submit a bid, the paper said. @Email:[e-mail]