Dutch pension fund and Shell eye acquisition of energy company Eneco

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Dutch pension fund PGGM and oil major Shell have announced they will explore the acquisition of sustainable energy provider Eneco. The companies said they were “impressed” with Eneco’s performance with regards to furthering the Dutch energy transition.

The two suitors said they envisage Eneco operating from Rotterdam with potential investments in the Netherlands and abroad. Thus far Eneco has been active in northwest Europe. Shell and PGGM said the plan could be executed with Eneco as a separate entity, building on its brand.

“The energy transition offers good opportunities for long-term investments in a more sustainable economy, and we think Eneco can play a central role in realizing the consortium’s shared ambitions,” said Frank Roeters van Lennep, chief investment officer for private markets at PGGM. “PGGM and Shell bring complementary experience and expertise across Eneco’s activities, which will support the delivery of affordable, sustainable energy to a growing number of customers in northwest Europe.”

Eneco’s 53 municipal shareholders announced in December they would sell to an acceptable bidder, subject to conditions and commitments. At the time, the company said that together with its shareholders it had examined options for privatization such as a flotation, controlled auction or dual track process.

Shell stresses environmental commitment

Following consultation with the shareholders, the group gave preference to privatization by means of a controlled auction. Ruud Sondag, CEO of Eneco Group said: “Over the past months, the board of management has collaborated with the shareholders, supervisory board and central works council in a constructive manner on laying a good foundation for the future. We are confident that by entering into a sales process we will find a new shareholder that is a good match with Eneco.”

The company said the going-private decision had been made taking into consideration future strategy.

Oil giant Shell says it has made considerable investments in renewable energy companies and has subsidiaries dedicated to clean energy. For example, in Moerdijk in the Netherlands, Shell has installed a 20 MW project next to one of its chemical factories, to provide around 3% of the factory’s energy. Shell Ventures also made a €60 million investment into battery storage supplier sonnen last year. The company acquired a 44% stake in U.S.-based Silicon Ranch as well as stock in U.K. energy firm First utility and took a 49% slice of Cleantech Solar, in Singapore.

However environmental concerns about the fossil fuel company would add an element of controversy to a sale and it remains to be seen whether Eneco’s shareholders would give their approval.

While Shell and PGGM are not making a set offer – the latest announcement refers only to an exploration of possibilities – Shell added, “any potential investment should competitively fit within the company’s strategy and financial framework, and stated capital investment guidance range of $25-30 billion per annum.” Eneco reported in March that its non-current assets are worth €3.8 billlion.