Macquarie Asset Management (Macquarie), on behalf of managed funds, has reached an agreement to sell a 55.21 per cent stake in Czech Grid Holdings (CGH) to ČEZ Group. The terms of the transaction represent an enterprise value for the business of approximately €4 billion.
CGH owns GasNet, the Czech Republic's largest gas distribution network, and GasNet Služby, an associated network maintenance and operations business. The regulated gas distribution network transports energy to 2.3 million connection points via 65,000 kilometres of pipelines that cover 80 per cent of the country.
Macquarie first invested in CGH (formerly Innogy Grid Holding) in 2013. It gradually increased its stake in 2015 and again in 2019, when it formed a consortium with British Columbia Investment Management Corporation (BCI) and Allianz to acquire 100 per cent of CGH. This transaction will see Macquarie divest its managed stake of 55.21 per cent.
Will Price, Head of Utilities in EMEA for Macquarie Asset Management, said: "GasNet is a critical component of the Czech Republic's energy system. We are very proud to have supported the business for more than a decade, during which it has invested heavily to develop the network and significantly improved its operational and safety performance. As Europe's energy landscape continues to evolve, it's important that its infrastructure facilitates decarbonisation goals while remaining safe, reliable and affordable."
Since 2013, Macquarie has supported CGH as it has increased annual capital investment levels by circa 50 per cent.1 A cumulative €1.8 billion capital investment programme has helped fund the modernisation of its network, improving resilience and reliability while driving a 30 per cent reduction in network losses. The upgrades are helping accelerate the transition to a new energy mix by connecting heating plants to natural gas, supporting the Czech Republic's shift away from coal-fired generation. Investment has also been delivered to prepare for a transition to low-carbon alternatives including biomethane and hydrogen.
While investing to improve its network, CGH has strengthened its focus on Environmental, Social and Governance (ESG) risks and opportunities. During Macquarie's period of investment, CGH began publishing an annual sustainability report and made a Net Zero commitment. The business has also reduced its Lost Time Injury Frequency Rate to below one (per one million hours worked) - which recognises a focus on reducing workplace injury across the business.
Macquarie is a long-term investor in the Czech Republic. In addition to CGH, Macquarie-managed funds are currently invested in EP Infrastructure, and were previously invested in České Radiokomunikace.
The transaction is expected to reach financial close in Q3 2024.
