26 April, 2002 – CVC capital Partners, the British private equity group, has teamed up with TXU Energi in order to bid for Seeboard, the south east of England electricity and gas supplier.
Seeboard is being sold off by US parent company American Electric Power and it is expected that the sale will yield AEP between à‚£1.3bn ($1.9bn) and à‚£1.5bn.
TXU, which owns Eastern Energy and Norweb, has been shortlisted along with three other parties but is only interested in purchasing Seeboard’s retail energy business, which supplies an estimated 1.6m electricity and 400 000 gas customers. CVC would own the local electricity distribution network.
The other short-listed companies are Electricité de France, E.ON of and Scottish & Southern all of whom have existing supply businesses in the UK and seek to add to their customer vase in order to achieve critical mass within the competitive European energy market.
Seeboard is the latest UK electricity retailer to be sold off by its US owner after the initial rush for ownership following privatization. US companies have struggled to achieve any profitability with the regional units, few of which are large enough to benefit from economies of scale.
AEP has appointed Schroder Salomon Smith Barney to handle the sale of Seeboard, which it bought for à‚£1.6bn in 1996.
CVC Capital Partners derives its capital from pension funds, insurance companies, and individual investors. The company specializes in management-led buyouts of businesses in the UK and Continental Europe. It has a diverse portfolio, with holdings ranging from the tech sector to paper manufacturing to a fishing-lure maker. Founded in 1981 as Citicorp’s European private equity arm, in 1993 CVC carried out its own buy-out and is now owned by its management; it still advises Citigroup on its European investments.