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Dutch state-owned electric grid operator Tennet has tapped investment bankers to explore an initial public offering for its large German subsidiary, seeking to sever its links to the capital-hungry business after talks to sell it to Berlin collapsed.
Tennet has lined up bankers at Goldman Sachs, Morgan Stanley, ABN Amro and Deutsche Bank to plan a potential listing for the German unit, which could be valued at more than €20bn, according to people familiar with the matter.
The Dutch government has for years tried to sell the German grid operations, as it is reluctant to invest billions of Dutch taxpayers’ money into the modernisation of German electrical infrastructure.
Tennet invested €4.8bn in German infrastructure in 2023, compared with €2.9bn in its home market.
Germany’s energy grids play a key role in the government’s plan to increase the share of renewable energy to 80 per cent by 2030, up from 52 per cent last year.
More decentralised power generation and bigger swings in electricity production mean that grid operators will have to invest billions of euros into energy distribution infrastructure over the coming years.
Big Four firm EY puts the investment needs of all German electricity grids at €281bn by 2030.
A plan to sell the unit to the German government at a €22.5bn enterprise valuation fell through earlier this year.
A stock market listing in Frankfurt for Tennet’s German business could now come as soon as next year, the people said. However, they cautioned that Tennet was still exploring other options such as a stake sale which remained a more likely outcome than an IPO.
Regulated utilities such as grid operators have been popular investment targets for insurance companies and infrastructure investors as they operate in markets with high barriers to entry and generate stable and reliable returns.
Bankers at Lazard have been working with Tennet to weigh options for the German business.
Tennet declined to comment. The Dutch finance ministry, Goldman Sachs, ABN Amro and Deutsche Bank declined to comment. Morgan Stanley and Lazard did not immediately respond to a request for comment.
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