Australians heat up Poland as interest in Eastern Europe grows

A group of investors from Australia managing about $30bn in four classes including infrastructure are boosting their Eastern Europe exposure, as one of their portfolio companies buys a controlling stake in Warsaw’s heating network provider.

Dalkia Polska is taking advantage of Poland’s privatisation program to buy an 85% stake in Przedsiębiorstwo Stołeczne Energetyki Cieplnej (Spec SA), the city of Warsaw’s heating network, and the largest district heating network in the EU.

Dalkia Polska is in turn part-owned by IFM, a manager investing on behalf of institutional clients and owned by 32 not-for-profit Australian superannuation funds.

IFM has invested in global infrastructure assets since 1995, and now has about $10 billion invested in the class equally split between global and Australian funds.

The privatisation-purchase in Poland will leave Dalkia Polska overseeing district heating networks and co-generation plants in three of Poland’s four largest cities, also including Lodz and Poznan.

Through its subsidiaries it generates and ferries heating to over 1.1 million Poles.

The privatisation of Spec is expected to close in the last quarter of 2011, and will more than double Dalkia’s share of Poland’s district heating sector from 11% to 25%.

Infrastructure in Poland – one of few European countries to avoid the worst of Europe’s recession during and after the credit crunch – could benefit from about €67bn committed from the EU for infrastructure spending, deliverable by 2013.

Christian Seymour (pictured), IFM’s head of infrastructure for Europe, said IFM liked the project because of Poland’s strong economic fundamentals and for providing IFM’s institutional investors greater exposure to a “regulated and growing energy sector.

“The investment in the district heating network of Warsaw will provide investors in our global infrastructure fund access to a leading energy asset in a stable and growing economy.”

He added: “Poland has shown resilience during the economic downturn by continuing its positive GDP growth. Based on our analysis, we expect the country to outperform its peers in Central and Eastern Europe with forecast GDP growth of 4% in coming years. This trend provides greater certainty to our investors in our long term commitment to core infrastructure in this region.”

Frederic Michel-Verdier, executive director for IFM in London, added there were forecasts of increasing demand for district heating in Poland due to population growth and increased urbanisation.


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