THE ESB is likely to tap international bond markets to help fund its proposed €1.25 billion purchase of Northern Ireland Electricity (NIE).

The State energy company yesterday announced that it has agreed to buy NIE, which controls the North’s electricity transmission and distribution networks, from its owner, Viridian, for €1.25 billion.

ESB chief executive Pádraig McManus said that it intends to borrow to pay for the acquisition, which is expected to go through by the end of the year. Mr McManus said the company has had a positive response from the markets.

“Banks like utilities, because everybody needs them,” he said. “This is a regulated utility and banks like them even more because you get a guaranteed return.”

The company is likely to raise the money it needs on the bond market. It already has debts of €2.3 billion. When it announced a long-term investment plan last year, which involves spending a total of €15 billion, the ESB said that it would be likely to borrow up to €6 billion of that total.

Mr McManus said borrowing to pay for the NIE purchase would keep it well within that limit. The company intends getting its first credit rating by the end of this year.

Along with the purchase price, the ESB is taking on NIE’s debts, including a €211 million eurobond. The deal is conditional on those loans being refinanced.

Once it does go through, the ESB will own the North’s national grid, the backbone of the electricity network, which transmits power from generating stations, and the distribution network, which delivers power to customers. The deal means that the ESB will control over €7 billion worth of transmission and distributions assets.

Northern Ireland’s utility watchdog regulates NIE, which means it determines licensing and the amount that is charged to electricity suppliers to use the network.

The ESB will not manage the network. This is done by the System Operator Northern Ireland, which is owned by Eirgrid, the State company that has been managing the Republic’s national grid since 2006.

Viridian is one of the ESB’s rivals. It owns Huntstown Power, which operates two generating plants in north Dublin, and Energia, which supplies electricity to business and industrial customers.

Along with this, it owns NIE Supply, a regulated electricity supplier to 800,000 residential and business customers in Northern Ireland, and Power Procurement, another regulated business, with 1,500 mega watts of generating capacity.

Viridian will continue to own these businesses.

Its ultimate parent is Bahrain-based Arcapita Bank. The company intends using the proceeds from the sale of NIE to boost Viridian’s balance sheet.

NIE employs 1,300 people. It will continue to operate as a stand-alone business, with a separate brand, within the ESB group.

The ESB is Ireland’s biggest power company and employs 6,800 people.