PGW draws bevy of potential bidders, broker says

The sale of PGW, including its Richmond Plant, could net nearly$500M, the city's financial adviser has said.
The sale of PGW, including its Richmond Plant, could net nearly$500M, the city's financial adviser has said. (MICHAEL S. WIRTZ / Staff Photographer)
Posted: September 19, 2013

The broker selling Philadelphia Gas Works said the city has received "a lot more than five" submissions from potential bidders to privatize the utility.

Paul Dabbar, the JPMorgan banker who is the city's lead broker on the PGW sale, said Tuesday he was pleased with the response to a request for qualifications from potential buyers that closed Aug. 30. The bidding process is expected to be completed by January.

Dabbar declined to identify potential bidders and dismissed a report by a British trade publication that identified five bidders, most private equity firms.

Infrastructure Journal, quoting unnamed sources, said the city had received responses from Macquarie Group, an Australian private equity giant; KKR & Co., the New York private equity firm; Global Infrastructure Partners, an investment firm with expertise in energy projects; Xcel Energy, a Minnesota utility company with operations in eight states; and Carlyle/Riverstone Energy, a partnership of Carlyle Group L.P. and Riverstone Holdings L.L.C.

A statement last week from Mayor Nutter's office said potential bidders included "international and domestic utility owners and operators of utility and infrastructure assets." The statement portrayed the response in glowing terms without offering specifics.

"It is extremely encouraging that we received such a tremendous response from so many interested parties that are capable of continuing PGW's safe, reliable operations," Nutter said in the statement.

Dabbar, the JP Morgan broker, said most of the potential buyers had experience buying government-owned assets and were familiar with the challenges of privatization. He said all of the companies that submitted qualifications were being invited to bid.

Bidders next will receive additional financial and operational information about PGW that they will use to submit a nonbinding "indicative" bid in October.

The city will select a group of finalists from the initial bids to participate in the final phase of the sale process, including the submission of binding proposals to acquire PGW.

The city expects to negotiate final terms with the winning bidder in December or January.

The transaction will require approval from City Council and the Pennsylvania Public Utility Commission, a process that could take up to a year.

The city's financial adviser, Lazard Freres, suggested last year the city might net nearly $500 million after paying off PGW's $1.2 billion in liabilities.

In a related matter, the Philadelphia Gas Commission, which has control over the utility's budget, voted unanimously Tuesday to reject a Nutter administration proposal to spend an additional $130,000 for fees for professional advisers on the sale.

The mayor in January said PGW needed to set aside $2.7 million to pay a team of lawyers, financial advisers, and communications consultants.

Contact Andrew Maykuth at 215-854-2947, @Maykuth or

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