IFM waits to make a move in Naturgy. The Australian fund, which broke into the gas company’s capital in 2021 with its own partial takeover bid, is left in a compromised position in the face of the drumbeat of a new offer. The Emirati electricity company Taqa is negotiating with Criteria, the company’s first shareholder with 26.7% of the capital, a joint takeover bid to acquire the securities held by the CVC and GIP funds, each with 20%. The fund piloted in Spain by Jaime Siles has not yet made a decision in this regard and, according to financial sources, all options are on the table: sell its shares, remain as a minority partner or look for other alternatives to retain power.
It is no secret to anyone that CVC and GIP have been trying to sell their joint 40% in Naturgy for years. The appearance of Taqa offers a possibility of acquiring these shares, as well as increasing the company’s free float, currently at 15%. Criteria, the first shareholder with 26%, also seeks with this movement to reinforce its weight in the capital, with the aim of maintaining its ascendancy over the former Gas Natural.
The transaction faces, however, several obstacles, to the point that it has been on hold for more than a month. One problem is the difficulties for Criteria and Taqa to reach a governance agreement in order to cohabit in Naturgy, agree on a price with the selling funds and provide liquidity to the share. The first issue seems on track, but both the negotiations with CVC and GIP and the difficulties in squaring the figures are still on the table. From here on, the issue will be in the hands of the Government, which must approve the operation.
The third issue is the role of Algeria, faced with Abu Dhabi, Taqa’s main shareholder. The Medgaz gas pipeline runs through Algeria, the main gas supply route to Spain and whose ownership is shared by Naturgy, BlackRock and the African country’s public electricity company, Sonatrach. This company is also the owner of 3.8% of Naturgy itself.
In this context, the Australian fund, which has 15% of the gas company’s capital, is waiting for the moment. On paper, Siles has repeated time and time again that the vehicle is intended to remain almost perennial in the companies in which it invests and that its bets are not short-term. These postulates seem to indicate that his idea would be to maintain his titles regardless of Naturgy’s future. However, the market does not take it for granted.
IFM launched its offer at 22 euros per share and, although it has acquired some more shares, a takeover price of around 27 euros would allow it to pocket abundant capital gains. Furthermore, it is not clear what role the fund could assume in this new Naturgy, where Taqa and Criteria would exercise absolute power with the vast majority of the capital in their hands. IFM – which with the current 15% is close to being able to appoint a second director, its stated objective since it launched the takeover bid, and having the same weight that CVC and GIP now have – would see its role blurred, which would be practically limited to collecting dividends .
The fund also contemplates a third option. In fact, it is studying the proposals submitted by several European energy groups to launch a joint takeover bid for the Spanish company, according to the aforementioned sources. The idea is to have an alternative in case Taqa and Criteria’s offer runs aground. If you win, you will also have the chance to press the button and launch a counter-take in which the funds decide.
The Australian vehicle plans to propose an alternative that will be viewed favorably by the Government, by replacing the Arab component with a European one, while IFM would remain linked to the conditions set by the Council of Ministers to approve the takeover bid in 2021. The market He already speculated two years ago with the French oil company Total as a possible investor in Naturgy, which would buy the stakes of CVC and GIP. In addition, this summer the Government’s limitation on IFM from supporting a delisting from the stock market expires, which would allow this fund to launch a delisting takeover bid starting in September.
Furthermore, IFM’s vocation to increase its weight in Naturgy is no secret. The fund launched its takeover bid in 2021 for up to 22% of the capital, but ultimately had to settle for 10%. Since then it has been strengthening its position with periodic purchases in the market up to the 15% it now holds.
The emergence of IFM into Naturgy was controversial and aroused the suspicions of Criteria, which during the takeover approval period took the opportunity to buy shares on the market and put its success in check. The waters calmed down later, but they became cloudy again in recent months, at the last general meeting of Naturgy shareholders.
At this meeting, IFM decided to change the direction of its vote and went from supporting the previous year’s summit to abstaining from the board’s remuneration report. Criteria moved its vote in the opposite direction, given that if it had maintained the abstention from the previous year, support for that report would have been less than 50%. Although it is an advisory vote, the truth is that this result would have left Francisco Reynés’ continuity as president of the company up in the air.
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