Exclusive-EQT readies $3.4 billion sale of French water services firm Saur

By Andres Gonzalez and Pamela Barbaglia

MADRID (Reuters) -European buyout firm EQT (NYSE:) is working with advisers to prepare the sale of French water management firm Saur in a deal that could value France’s third-biggest water firm at about 3 billion euros ($3.43 billion), sources told Reuters.

EQT has hired Rothschild to sound out prospective bidders for its 70% stake in Saur ahead of an auction process that is expected to kick off later this year, one of the sources said, speaking on condition of anonymity.

The Stockholm-listed investment firm, led by Christian Sinding, is looking to cash out for about 3 billion euros after it bought Saur in 2018 and will target a wide range of financial investors, the sources said.

The company, which is also backed by BNP Paribas (OTC:), has already drawn interest from Munich-based Reimann Investors – a family office that operates on behalf of Germany’s billionaire Reimann family, one of the sources said.

Cash-rich infrastructure investors are expected to come forward for Saur which serves roughly 7,000 local authorities in France under long-term contracts that appeal to financial investors as they generate a stable cash flow.

EQT and Reimann Investors were not available for comment while Rothschild declined to comment.

The move comes as French waste and water management giants Veolia and Suez are in the process of finalising a tie-up that would create a national champion.

For infrastructure funds water management is a lucrative industry, with EU countries spending an estimated 100 billion euros per year on water supply and sanitation, according to the Organisation for Economic Cooperation and Development (OECD).

Under EQT’s ownership Saur has scaled up its business overseas with acquisitions in Portugal and the Netherlands.

The company is also present in Saudi Arabia, Britain and Poland as well as in Spain where its local subsidiary Gestagua could be used as a possible platform to access South American markets, its Chief Executive Patrick Blethon told Spanish media on Feb. 7.

Saur refinanced its debt in September when it issued sustainability-linked bonds worth 950 million euros and secured a senior revolving credit facility of 250 million euros.

($1 = 0.8763 euros)