Viridian’s New York owners plot energy group stake sale

The US private equity firm that bought Northern Ireland energy group Viridian last year in an estimated €1 billion deal is seeking to take some of its money off the table by selling a major stake in the company, according to sources.

New York-based I-Squared Capital, founded in 2012 by former executives at Morgan Stanley's infrastructure arm, is understood to have hired investment bank Evercore to find a buyer for about a 20 per cent stake in Viridian, owner of electricity and gas supplier Energia and Power NI.

Evercore is familiar with the business, having advised the seller of Viridian last year, Bahrain’s Arcapita Bank, which had owned the power company for almost a decade.

Sources said Asian sovereign wealth and investment funds are among would-be investors giving the deal the most attention. They would have to be supportive of the I-Squared’s stated plans to use Viridian to buy businesses in Ireland and the UK.

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The stake sale is also occurring against the backdrop of general uncertainty caused by Brexit and plans to be unveiled next week by the UK Conservative Party to cap domestic energy bills in the likely event it is returned to power in a general election in June.

Minority stake

Sources said I-Squared has set a minimum, but undisclosed, price at which it would sell the minority stake in Viridian and is prepared to abandon the process if this is not achieved.

A spokesman for Viridian in Belfast declined to comment. Representatives from I-Squared did not respond to a request for comment.

Immediately after I-Squared bought Viridian in April last year, it injected cash into the business to repay a £149 million (€176.6 million) high-cost junior bond. It also merged two entities, Viridian Group Investments Ltd (VGIL) and Viridian Group Holdings Ltd (VGHL), with the former entity surviving. As part of the transaction, VGHL extinguished a £400 million shareholder loan to VGIL.

Since the acquisition last year, Viridian has acquired three companies in Northern Ireland with a total of 64 megawatts of windfarm assets under development, enough to power about 35,000 homes. The deals totalled a combined £18 million.

The most recent set of results for Viridian show that it reported earnings before interest, tax, depreciation and amortisation of £71.6 million for the nine months to the end of December, compared to £69.2 million for the same period in 2015. The result was helped by sterling weakness after the Brexit referendum, as income from the Republic was translated into the UK currency.