Denmark’s ATP is investing DKK500m (€67m) in energy trading firm NEAS Energy in an equity and debt deal the statutory pension fund believes gives it exposure to a little-understood sector with potential for substantial growth.
The investment is being made in conjunction with private equity firm Via Venture Partners, which ATP has invested through before, and in which it is the sole investor.
The deal consists of the acquisition of a minority stake in NEAS Energy as well as a debt injection, adding up to a total investment of DKK500m.
A consortium consisting of Via Venture Partners and ATP will take ownership of around 30% of NEAS Energy for an equity investment of DKK250m, with the former taking approximately 18% and the latter around 12%, and ATP will provide a loan of DKK250m.
NEAS Energy – which describes itself as an energy trading and asset management company for the physical and financial management of power, gas and related commodities on energy markets – is based in Aalborg in Denmark but operates internationally.
Ulrik Dan Weuder, head of ATP’s infrastructure investments, said: “Co-investing with Via Venture Partners is one way of providing ATP access to attractive direct company investments, as it was also the case in the KMD and Nets investments.”
He said ATP was interested in both debt and equity investments in companies it expected to produce good returns to its members.
For its part, NEAS Energy said the investment would enable it to continue its international expansion.
Bo Lynge Rydahl, chief executive of the company, said: “We see the investment of Via Venture Partners and ATP as an endorsement of our company and the future potential of our business.”
Dan Weuder said he was excited about the potential for growth among investments in Europe’s rapidly changing electricity markets.
“The European electricity market is in a state of such change right now, there are so many things going on, with a whole new industry of traders being created,” he told IPE.
He said the market was now very fragmented following the emergence of so many different sources of energy to be used to supply power.
These alternative energy sources, and the uncertainty about when they will be available to the transmission market, has created a new sector of brokers and other operators that need new skills such as weather forecasting.
This new sector was needed to manage that power supply and optimise it, Dan Weuder said.
“As investors, we need to respond to all this change, and it’s an area where you can really get something wrong if you don’t understand what’s going on,” he said.
He said ATP was pleased to work with Via Ventures on the deal not least because the firm “really knows” the companies in which it invests.
“It gives us a special protection,” he said. “We do our due diligence, but they are the ones that do most of the work.”
On the finance structure of the deal, Dan Weuder said ATP was keen on investments where there was equity including board representation as well as debt.
NEAS Energy has more than 200 staff in Aalborg, Stockholm, Hamburg and London and operates in 18 power and gas markets in Europe.
It has a portfolio of 6,668MW of installed capacity under management from customers in renewable and thermal energy generation, the investors said.
The final transaction is expected to be finalised in the first half of this year, pending approval from the relevant authorities, Via Venture Partners said.
Carnegie Investment Bank and Bruun & Hjejle advised NEAS Energy in the deal, as well as its owners, while FIH Partners and Kromann Reumert advised Via Venture Partners.