Valuation was 'out of kilter with market realities'
THE Government's strategy over the sale of Bord Gais Energy has left some market-watchers scratching their heads.
Energy company Vayu said that the Government didn't fully factor in what the business is really worth in today's market.
"It has been clear for some time that the value the Government placed on the business did not fully incorporate today's market realities, and so is out of kilter with what the market believes it is really worth," the independent energy supplier said.
Canadian Investment Bank RBC managed the sales process along with semi-state sell-off adviser New Era.
The Department of Energy said that it did not receive adequate bids for the utility, but the Irish Independent understands that The North's energy company Viridian offered at least €1bn in an earlier bidding round.
At that point, the Government's advisers cast about for other bidders for the final auction round.
Three bidders, including Viridian, all offered less than €1bn in the next round, prompting questions as to why Viridian's €1bn offer wasn't accepted earlier.
The Department of Energy said it would not comment on commercially private aspects of the bid.
Speaking to the Irish Independent yesterday, Energy Minister Pat Rabbitte appeared to leave the door open on further offers.
"Who knows what's going to happen in the next week?" he said.
"The process has finished, but if someone wants to come in with a better offer they can.
"Nothing went wrong, the bids just weren't acceptable, offering not enough money," Mr Rabbitte said. "Are you suggesting that we should sell state assets for a song?"
The minister confirmed that there were three final bidders in the running. These are understood to be Bahraini-owned Viridian, British utility company Centrica and private equity Blackstone.
Mr Rabbitte said that trade union resistance to a sale or towards any particular bidder was not a factor in the process being cancelled, although SIPTU has said it was unhappy with parts of Viridian's plans for the business if it was successful.
Vayu added: "It could be years now before anything fundamental happens with respect to the Bord Gais supply business.
"The Government will be very conscious of the criticism received when Eircom and Aer Lingus were privatised so in some senses they may feel they've dodged a bullet."