The transaction is a continuation of Fortum’s strategy execution, whereby Fortum continuously reviews its businesses to optimise its portfolio for value creation
Fortum has signed an agreement to sell its district heating business in the Järvenpää-Tuusula area in Finland to a consortium consisting of Vantaa Energy Ltd, Infranode, and Keva. The total consideration on a debt- and cash-free basis is approximately EUR 375 million. Fortum expects to record a tax exempt capital gain of approximately EUR 290 million in the City Solutions segment’s third-quarter 2020 results. The transaction is subject to customary closing conditions and is expected to be completed in the third quarter of 2020.
The transaction is a continuation of Fortum’s strategy execution, whereby Fortum continuously reviews its businesses to optimise its portfolio for value creation. In June 2019, Fortum announced it considered the strategic options for its district heating businesses in Estonia and in Joensuu, Finland. This resulted in the divestment of the district heating business in Joensuu in early January 2020. In February 2020, Fortum announced it would review and consider strategic options for the district heating businesses in Järvenpää, Poland and the Baltics. In June 2020, Fortum agreed to increase its ownership to 100% in the Tartu district heating business in order to increase the flexibility in potential future options for the Estonian district heating businesses. The strategic review for the district heating businesses in Poland and the Baltics is still ongoing and proceeding according to plan.
“The divestment of our district heating business in the Järvenpää-Tuusula area follows the successful divestment of the Joensuu district heating business in line with our portfolio optimisation. We are pleased that the buyer is a consortium with strong local presence with high ambitions to further develop the business in this area. In our heating business in Finland, we will continue our efforts on the decarbonisation project targeting discontinuation of the use of coal in 2025 in the district heating network in the City of Espoo,” says Per Langer, Executive Vice President, City Solutions at Fortum.
“We’re pleased that Fortum chose our consortium as the new owner of the district heating business in Järvenpää-Tuusula area. Vantaa Energy has a strong expertise in producing district heating services in a sustainable way. The share of renewable and carbon neutral energy forms in production has been increased consistently, and the company will continue in the same direction. Keva and Infranode both have strong experience in implementing similar investments and expertise in the field of energy infrastructure in the Nordics,” says Jukka Toivonen, CEO of Vantaa Energy.
“We are excited about the opportunity to invest together with Vantaa Energy and Infranode in this important Finnish core infrastructure in a developing and growing region. Keva is a long-term investor and this type of infrastructure investment fits excellently in our investment portfolio. The investment offers a stable, predictable, and long-term cash flow. The company uses considerable amounts of renewable energy, which naturally suits Keva well as a responsible investor,” says Ari Huotari, CIO at Keva.
“With this important investment we continue in our effort to be a preferred infrastructure investment partner to Finnish municipalities. We are very happy for doing this investment in partnership with Vantaa Energy as co-owner and operating partner offering attractive synergies,” adds Carl-Emil Lindholm, Director at Infranode.
In 2019, Fortum produced approximately 330 GWh of heat and approximately 90 GWh of power in Järvenpää. The operations currently employ three Fortum employees, who will transfer with the business as old employees. The operation and maintenance services are sourced from an external partner.
Source: Company Press Release