On 10 May 2024, Norway-based regulated electricity distribution system owner and operator Fredrikstad Energi AS announced that its main owner, Fredrikstad municipality, has initiated a process to sell its 51% stake in the company. The other owner, Hafslund (49%), which is wholly owned by Oslo municipality, has announced no intention to sell. Our 'BBB+' rating on Fredrikstad Energi is underpinned by the controlling municipal ownership and strategic interest in the company, as defined by our Group and Government Support Methodology.
Fredrikstad municipality has previously communicated that it has evaluated the possible sale of its majority stake, but the initiation of a sales process increases the probability that a sale will go ahead. In our view, the current sales process creates uncertainty about the company's future ownership structure. At present, we believe that if a sale materialises, the most likely buyer would be another government-related utility company seeking synergies. Fredrikstad Energi would likely remain controlled by Norwegian municipalities. We do not discount the possibility of an acquisition by a non-government-related entity, but view this as an unlikely outcome given an ongoing trend of consolidation among Norwegian utilities.
We expect to obtain more clarity about potential buyers during the sales process. We anticipate an outcome by end-2024.
This commentary does not constitute a rating action.
Contacts:
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com