Belfast Telegraph

Terra Firma makes profit on sale of Phoenix division

By Clare Weir

The private equity company which sold the supply division of Phoenix Natural Gas has made a "significant profit" on the deal.

Economist John Simpson said Terra Firma will have "done very well" out of the £19m sale of the business to Airtricity owner SSE.

The holding company of Phoenix Energy Holdings, which includes the division which operates the Greater Belfast natural gas supply network, was bought by the private equity firm in 2005 for an estimated £435m. Yesterday's deal saw Terra Firma sell the business to SSE but retain ownership of Phoenix Natural Gas, which operates the gas network.

"Phoenix have spent a lot of time and money building up the business," he said. "To be able to sell at that price in the current climate is a great deal for Phoenix and indeed Terra Firma, especially compared to the Phoenix balance sheet."

The deal means Airtricity will now become Northern Ireland's second biggest energy supplier.

About 230,000 customers will benefit from the first ever dual fuel billing available in Northern Ireland with electricity and gas coming from a single supplier.

Airtricity entered Northern Ireland's domestic electricity market in 2010 and has seen over 100,000 Northern Ireland domestic and business electricity customers sign up.

Airtricity chief executive Kevin Greenhorn told the Belfast Telegraph that following the sale there will be a rebranding of the firm.

The proposed purchase of the supply businesses by SSE plc (Airtricity) is subject to a joint notification to the Irish Competition Authority and confirmation from the authority that the purchase will not result in a substantial lessening of competition in the Republic of Ireland. He also assured that there would be total absorption of the existing staff with no job losses.

"We have wanted to get into the gas market in Northern Ireland for some time and this was by far the best and fastest way to do so," he said. "By acquiring Phoenix we have sped up the process considerably, without this purchase it could have taken us decades.

"We also hope to offer reduced prices to our business and commercial customers. The business market is not regulated but with the dual-fuel proposition we hope to be able to offer savings.

"While the deal is in the hands of the competition authority there will be no immediate change, but by the summertime we hope to be sitting down with staff and discuss the way forward for the company."

Factfile

Terra Firma was established by Guy Hands in 1994, originally as Nomura International's Principal Finance Group (PFG). Since 1994, Terra Firma has invested over €13bn (£10.3bn) in 30 businesses with an aggregate enterprise value of €44bn (£35bn). Other investments include energy firms EverPower, RTR and Infinis, Odeon -amp; UCI Cinemas and Tank -amp; Rast motorway services. The firm raises private equity from large institutional investors and businesses which have been under-managed or under-capitalised.