Bankinter | Iberdrola (IBE) is in the final straight to bid for the British electricity company Electricity North West Limited (ENWL). Iberdrola, on the one hand, and Engie and Quebec , on the other, will present their binding bids for ENWL on 24 July. ENWL is one of the ten largest distribution networks in the UK , controlling the North West of England. The American fund has approached Iberdrola offering to enter into a subsequent agreement to accompany the Spanish company as an investment partner in the UK in the event that it wins the ENWL tender and then decides to merge this group with its British subsidiary, Scottish Power.
Analysis: Positive news for Iberdrola, if the purchase of ENWL and the subsequent agreement with KKR finally materialise. The attraction of ENWL for Iberdrola is that it is a company that is fully complementary to Scottish Power and where it could extract significant synergies.
Scottish Power is Iberdrola’s UK subsidiary and its network does not overlap with that of ENWL. The purchase of ENWL could be in the region of £4.3 billion. KKR’s interest is mainly focused on the electricity network assets, the great treasure of the combination of ENWL and Scottish Power and what gives meaning to Iberdrola’s presence in this bid.
KKR wants to be Iberdrola’s partner in network development in the UK. KKR’s approach to Iberdrola would be the equivalent, in networks in the UK, to that which Iberdrola is carrying out with other financial giants in other businesses under the partnership model. Under this structure, Iberdrola incorporates partners in certain businesses, but always maintaining the majority. This is the case of Norges in renewables in Spain, GIC in networks in Brazil and Masdar in renewables outside Spain.
Iberdrola’s 2024-2026 Strategic Plan envisages gross investments of €41 billion, most of which (66%) will be dedicated to networks. The purchase of ENML fits in with the group’s Strategic Plan. The entry of funds of €6,000m from the sale of assets in Mexico and the subsequent agreement with KKR gives it the financial flexibility to deal with this acquisition and future investments necessary for the development of the networks in the United Kingdom.
