PGGM Acquires Minority Stake in Swedish Heating Company Stockholm Exergi

Source Press Release
Company PGGMAPG Groep NVAXA Investment Managers S.A.Fortum (IFRS) 
Tags Corporate Deals, Deals, Power
Date June 30, 2021

Helsinki, Fortum has agreed to sell its 50% holding in Stockholm Exergi Holding AB (the “Company” or “Stockholm Exergi”) to a group of long-term European institutional investors with a strong commitment to the infrastructure sector comprising APG, PGGM, Alecta, Keva and AXA IM Alts (together, the “Consortium”).

Stockholm Exergi is the owner and operator of the largest and most versatile district heating and district cooling network in the Nordics. The Company provides highly environmentally sustainable district heating for both corporate and residential customers across seven municipalities in Stockholm County, and critical electricity capacity to the Stockholm electricity grid.

Anders Egelrud, CEO of Stockholm Exergi: “For the world to meet the climate change, both renewable energy and negative emissions are needed. Our goal is a climate-positive business in 2025 and to succeed in this, strong, committed, and long-term owners are required who share our view of sustainability - properties such as the City of Stockholm, Fortum and the investor consortium led by APG all share. We want to thank Fortum for their important contribution as co-owners and look forward to the next chapter in our journey towards creating the world's first climate-positive capital, together with partners, customers and owners.”

Carlo Maddalena, Senior Portfolio Manager at APG, said: “The investment in Stockholm Exergi, on behalf of our pension fund client ABP, represents a significant milestone of APG’s overall commitment to significantly reduce CO2 emissions worldwide. Stockholm Exergi has a fantastic track record of growth, leadership in ESG and delivering and developing customer centric solutions (like Carbon Capture and Storage), all of which are driving the long-term sustainable energy transition of Stockholm and the region. We intend to grow Exergi by investing significant capital, targeting to enhance the environmental sustainability and efficiency of its heating plants and district heating networks. Alongside our consortium partners, we are looking forward to working with management to support them in their ambitious vision, and with the City of Stockholm to develop our future long term partnership.”

Erik van de Brake, Head of Infrastructure at PGGM, said: “Stockholm Exergi is leading the way in developing and operating large-scale sustainable solutions for local heating. With the aim of becoming carbon negative in 2025, this company fits very well in our portfolio where we want to combine stable financial returns with measurable societal impact. For our PGGM Infrastructure Fund this expands our footprint in the Nordics and is a second investment in district heating after acquiring a majority stake in the Dutch company Ennatuurlijk in 2014. Through these investments the beneficiaries of our clients like Pensioenfonds Zorg en Welzijn are supporting the energy transition directly while growing their pensions at the same time.”

Johanna Strömsten Friberg, Portfolio Manager at Alecta, added: “We believe Stockholm Exergi is an excellent business that exhibits all the financial and ESG characteristics we look for when investing in the infrastructure asset class. The experienced management team of Stockholm Exergi has made remarkable ESG accomplishments during the last couple of years and we are keen to support the Company in pursuing its ambitious goal of becoming climate-positive by 2025 and generating negative emissions.”

Markus Pauli, Head of Alternative Investments at Keva, said: “We are excited about the opportunity to grow our infrastructure assets by investing in Stockholm Exergi. Investment opportunities of this quality and size are not common. This investment really fulfills Keva´s financial and ESG aspects and we look forward continuing developing it together with our partners and with the City of Stockholm. Keva is a long-term investor and this type of district heating infrastructure investment fits excellently in our investment portfolio. The investment offers a stable, predictable and long-term cash flow. Stockholm Exergi has a high ambition on sustainability and plays an important role in the climate targets of the whole region, which naturally suits Keva well as a responsible investor.”

Mark Gilligan, Head of Infrastructure Equity at AXA IM Alts, said: “AXA IM Alts, acting for its clients, is thrilled to invest in Stockholm Exergi as it is aligned with our Net-Zero objectives while providing cost-effective essential heating and cooling to the citizens of Stockholm.”

Advisors to the Consortium were DC Advisory and Rothschild & Co (M&A and Debt), White & Case (Legal – M&A), Latham & Watkins (Legal – Financing), AFRY (Commercial, Technical & EHS), PwC (Financial, Tax, Carve Out, IT and Operations), Hallvarsson & Halvarsson (Public Relations).
The acquisition was supported with a financing package provided by Intesa Sanpaolo, Mediobanca – Banca di Credito Finanziario S.p.A., Natixis and Société Générale. Lenders were advised by Weil, Gotshal & Manges.

The completion of the transaction remains subject to applicable regulatory approvals and is expected to take place before the end of 2021.

Source: EvaluateEnergy® ©2021 EvaluateEnergy Ltd