(Bloomberg) -- Tennet Holding BV has picked banks to help arrange a potential initial public offering of its German operations, according to people familiar with the matter.
ABN Amro Bank NV, Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are working with the Dutch grid operator on the possible IPO, the people said. Rothschild & Co. is advising the Dutch government, while Lazard Inc. has an advisory role with Tennet’s management, said the people, who asked not to be identified as the information is private.
Deliberations are ongoing and a stake sale could still be an option, some of the people said. Representatives for the Dutch finance ministry, Tennet, ABN, Deutsche Bank, Goldman, Morgan Stanley, Rothschild declined to comment, while Lazard didn’t immediately respond to requests for comment.
The Netherlands and Germany were in talks for more than a year to work out a sale of Tennet’s German power grid before discussions collapsed in June. The cost proved too much for Berlin’s stretched finances, and since then there have been efforts to find alternative investors for the network.
The Dutch government last month said it will lend Tennet another €19 billion ($21 billion) for its capital requirements, in addition to the €25 billion loan it provided in January. The new loan is needed to meet increasing demand for electricity from households and companies.
A private sale of Tennet Germany’s stake or an IPO are seen as the “best ways of structurally solving” the cash-strapped grid operator’s capital requirements, the Dutch government has said. These options will be discussed in the months ahead, Dutch Finance Minister Eelco Heinen and Climate Minister Sophie Hermans said in a letter to parliament last month.
Tennet invited investment banks to pitch for leading roles as global coordinators on a possible listing of the German business, Bloomberg News has reported. One key sticking point in any deal will be the billions of euros in investments that the Tennet unit needs in the next few years to upgrade its grid, in order to allow the transmission of renewable energy from Germany’s northern shore to the power-hungry south, the people have said.
--With assistance from Dinesh Nair, Carolynn Look and Petra Sorge.
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