TenneT mulls $22bn IPO of German unit after Berlin ended takeover talks

Dutch state-owned transmission system operator TenneT is considering a €20bn ($22bn) initial public offering for its German subsidiary, after Berlin earlier this year had ended talks to take over the large unit of the TSO.

The Dutch TSO in 2010 had bought Transpower Stromübertragungs-GmbH, the TSO unit of utility E.ON in Germany’s North-West and South-East, for €1.1bn – at a time when offshore wind was still in its infancy. The unit since then has grown into a large operator of an ever-increasing number of German North Sea offshore wind grid links the Dutch state is no longer willing to finance.

An IPO at the Frankfurt stock exchange for TenneT’s German unit could come as soon as next year, the newspaper said, but added the TSO was also exploring other options such as a stake sale.

Germany’s government had planned to take over TenneT Germany via its development bank KfW after its offshore wind ambitions increased to a target of 70GW by 2045 – a volume requiring massive financial resources. Green Party climate and energy minister Robert Habeck with the deal intended to guarantee more planning security and sufficient funds for the TSO in order to avoid delays with the country’s much-needed grid expansion.

The ruling threw Germany’s budget planning into disarray – particularly regarding climate and energy policies – as the government simultaneously is bound to a zero-deficit rule enshrined in the constitution.

The TSO in June had already said it was preparing to tap into public or private capital markets for a structural financing solution for its German operations, the company said, adding that the German government had pledged to support such alternative solutions.