Status: 01.08.2022 2:09 p.m
The municipal owners of the fifth largest German energy company STEAG want to sell the supplier – if possible as a whole. However, the chances of a partial sale are probably better.
The municipal investment company KSBG and STEAG have decided to start a sales process, a STEAG spokesman announced today. The aim is to sell STEAG as a whole and not in parts. The Stadtwerke Duisburg, Dortmund, Bochum, Essen, Oberhausen and Dinslaken have bundled their STEAG shares in the holding company KSBG. KSBG has been the sole shareholder of the company since 2014.
The “Handelsblatt” had previously reported on it. According to this, an investment bank is to be mandated in the near future so that potential bidders for the Essen-based utility can be approached in the fall. The company could be valued at more than two billion euros in a deal.
Is the residual value enough?
According to the report, however, there is little interest for the entire group. Therefore, the possibility of a partial sale is being explored at the same time. Because in addition to the coal-fired power plants, the “black” part of the company, STEAG also operates “green” wind and solar systems. In addition, there are waste incineration plants and energy services.
So-called terminal value investors could be considered as possible buyers for the entire company. The newspaper wrote that they could take over STEAG cheaply and make a bet on making sufficient profits with the income until the coal activities are finally shut down, i.e. the residual value of the company. However, STEAG is also highly indebted: at the end of 2021, net debt was 485 million euros and 1.23 billion euros in pension provisions.
Leap in sales in 2021
Business is currently going well: last year, the energy company with around 5,700 employees increased sales by a good 37 percent to almost 2.8 billion euros. In the operating business, the result (EBIT) increased by a fifth to 234 million euros. In 2021, STEAG benefited both from higher electricity prices and from an overall increase in production. In the course of the high natural gas prices, the profitability of hard coal-fired power plants has also improved. For the current year, too, the utility expects significant increases in all relevant key figures without making any concrete forecasts.
Like other competitors, STEAG is confronted with price fluctuations and market turbulence, triggered by cuts in Russian gas exports to Europe and the tight global energy markets as part of the recovery from the Covid crisis.
Coal-fired power plants are being extended
Nevertheless, a purchase could be attractive for investors at the moment because some coal-fired power plants could run longer than planned due to the current energy crisis. Since July 14, a federal government regulation has allowed hard coal-fired power plants from the so-called grid reserve to go back into operation in order to save natural gas.
Company spokesman Markus Hennes said they have “firm intentions” to return to the market with 2,300 megawatts of generation capacity. This includes two blocks in Saarland, which are already in reserve, and two more blocks in Saarland and North Rhine-Westphalia, which were supposed to be shut down at the end of October.
STEAG still sees hurdles in this respect in the financial security of the large coal reserves, which must be available according to the Replacement Power Plant Availability Act (EKBG), and in transport logistics. The capacities on ship and rail are currently limited.