A service of

Vauban-CDC team agrees EUR 1.6bn takeover of Coriance

A consortium of Vauban Infrastructure Partners and Caisse des Dépôts (CDC) has agreed to buy French district heating company Coriance for an enterprise value of about EUR 1.6bn, sources familiar with the deal said.

The team will invest around EUR 1bn of equity to acquire Coriance from Igneo Infrastructure Partners, sources said, after it beat a rival offer by Quantum Pacific Group, the investment firm of Israeli billionaire Idan Ofer, in the final stage of the auction.

The price represents a multiple of about 19.5x the company's EUR 82m expected 2023 EBITDA, the sources said.

Coriance, which has some EUR 600m of net debt, generated about EUR 77m of EBITDA in 2022, which is forecast to increase to around EUR 88m in 2024, the sources added.

The growth is partly linked to the fact that Coriance, which currently operates 39 district heating and cooling concessions in France and Belgium, is expected to add two new concessions for which it was recently given exclusivity, including one in Caen, according to the sources.

Igneo acquired Coriance from KKR [NYSE:KKR] and GCM Grosvenor [NASDAQ:GCMG] in 2016 for an enterprise value of around EUR 600m, or 15x EBITDA at the time.

The company has doubled its EBITDA under Igneo’s ownership, mostly through organic growth by winning new concessions via public tenders and adding other clients, partly financing its expansion with capex facilities raised over time but without additional equity injections.

Igneo, which held Coriance through its European Diversified Infrastructure Fund I and other vehicles, is set to make a return of around four times the equity invested at the time of the takeover, one of the sources said.

The final price for Coriance was below the highest valuations presented in the round of non-binding bids, however, sources said, although the exact reason is unclear.

Four bidders were shortlisted for the second round of the auction, including the Vauban-CDC tie-up, Quantum Pacific, EQT Infrastructure and CDPQ. EQT and CDPQ formed a consortium in the final phase but dropped out before the deadline for binding offers.

New Zealand fund manager Morrison & Co and Macquarie Asset Management were also among the first-round bidders in the auction.

Sale multiples across the European district-heating market have increased in the past years, as governments are promoting a switch to district heating from less efficient heating sources, offering more growth opportunities to operators in the sector. Multiples in Scandinavia, where district heating is more established, have recently reached and exceeded 25x.

Coriance also proved attractive thanks to its green credentials, sources indicated. The company’s share of renewable energy sources has increased from around 50% at the time of Igneo’s acquisition to nearly 70% today, including biomass, geothermal and energy-from-waste, with the rest coming from natural gas and co-generation.

Idex, the latest major district heating operator to trade in France, fetched an EBITDA multiple of around 15x when it was sold to Antin in 2018, according to Infralogic data.

An announcement on the sale of Coriance is expected to be made later today (1 June), the sources said. Under French law, the parties will carry out consultations with trade unions and seek regulatory approvals before closing the deal later this year.

BNP Paribas and RBC advised Vauban and CDC, while Jefferies advised Igneo.

Igneo, Vauban and CDC did not respond to requests for comment.