Italian utility A2A teams up with Ardian in 4.5 bln euro green deal

Industry:    2021-06-10

Italian utility A2A is joining forces with investment fund Ardian in a cash-and-asset 4.5 billion euro ($5.5 billion) deal to create the country’s second-largest green energy provider.

The partnership will allow A2A, Italy’s biggest regional utility, to step up its green transition through joint investments, some of which the two groups are already working on.

As pressure increases to shift to cleaner energy, many companies are restructuring their businesses and looking to bring on board private investors to help to fund their green ambitions.

“A2A and Ardian are aiming to establish the second-largest Italian platform focused on the energy transition, and one of the largest electricity producers and suppliers in Italy, with a clear decarbonisation strategy,” A2A said.

Under their non-binding agreement, Ardian will pump up to 1.5 billion euros into a new company, which will house some A2A assets, with an enterprise value of around 3 billion euros.

A2A will transfer to the new company its hydrogen, wind and solar power plants alongside its energy supply business and storage assets, it said late on Tuesday.

Ardian will hold a 45% stake in the new company with A2A owning the rest.

The two groups have already identified potential investment targets and plan on evaluating further opportunities in the future, A2A said.

A2A and Ardian last year agreed to work together to develop green hydrogen projects and sources said the two are bidding together for hydroelectric and gas assets put up for sale by Italian wind power operator ERG.

Ardian, which has more than 3 bln euros invested in Italian infrastructure, is a shareholder of Italian fund F2i which is one of Italy’s biggest renewable energy players.

“The agreement with Ardian would make it possible for A2A to accelerate by several years reaching the growth objectives in renewable generation,” A2A CEO Renato Mazzoncini said.

A2A, controlled by the local governments of the northern cities of Milan and Brescia, has pledged to spend 16 billion euros by 2030 to cut its carbon footprint.

A2A also aims to triple its renewable capacity to 5.7 gigawatts through more than 4 billion euros in investment and acquisitions.

Analysts at Intesa Sanpaolo said the deal “could allow A2A to accelerate its growth in renewables, leveraging on both Ardian’s new capital and 15-year long expertise in the industry in Italy,” adding that it considered the valuation of assets as “fair”.

Shares in A2A were up 1.4% at 1.79 euros at 1030 GMT, the highest they have been since February 2020 and outperforming Milan’s broadly flat FTSE MIB index. They are up almost 35% in the past year

Paris-headquartered Ardian was advised by Nomura and A2A by Citi.

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