DUBAI/FRANKFURT: US private equity firm KKR has teamed up with the international arm of Kuwait Petroleum Corp to jointly bid for German utility RWE’s oil and gas unit DEA, four banking sources familiar with the matter said.
RWE, suffering from loss-making power plants, a boom in renewable power and ¤35bn ($47.2bn) in net debt, said in March it planned to sell DEA to save billions of euros it would otherwise have to invest in exploration and production.
Kuwait Foreign Petroleum Exploration Co (Kufpec), which is scouting for overseas acquisitions to beef up its energy portfolio, is joining hands with KKR to bid for the unit, potentially worth up to ¤5bn, the sources said, speaking on condition of anonymity as the matter is not public.
“It’s a pretty large asset and it makes sense for a private equity to team up with a strategic (partner). They are currently in active discussions with banks to appoint an adviser,” one Middle East-based banking source said.
KKR declined to comment, while Kufpec was not immediately available for comment. RWE also declined to comment.
With operations in 14 countries including Germany, Britain, Norway and Egypt, DEA employs nearly 1,400 staff and accounted for about 11 percent of RWE’s operating profit in 2012.
It has stakes in about 190 oil and gas licences or concessions in Europe, the Middle East and Northern Africa, some of which are non-producing and in need of large investments.
Sources told Reuters last month that RWE was asking bidders to submit offers for DEA by late December.
The sources said KKR and Blackstone were likely to submit bids. BASF’s Wintershall and Britain’s Centrica are also seen as potential bidders.
Kufpec has been eyeing international acquisitions in recent months to bolster its portfolio of energy assets. In May, it bought the Norwegian operations of Japan’s AOC Holdings’ upstream unit, Arabian Oil Co.
Reuters
