UPDATE 2-3i mulls options for Spanish windfarm firm GES

Tue Aug 31, 2010 1:51pm EDT

* Sources say 3i hoping to sell GES for about 500 mln euros

* GES spun out of turbine maker Gamesa in 170mln deal in '06

* GES made 732 mln euros revenues in 2008, had 4,500 staff

(Adds detail on LBO loans, prospects for sector)

By Quentin Webb

LONDON, Aug 31 (Reuters) - British private equity firm 3i Group Plc (III.L) said it had hired Citigroup (C.N) to conduct a "strategic review" of Global Energy Services (GES), the Spanish builder of wind farms it bought four years ago.

Two people familiar with the matter told Reuters that 3i was hoping ultimately to sell the company, and the buyout firm hoped GES could fetch roughly 500 million euros ($632 million). GES could interest both rival private equity firms and trade bidders, the people said.

"Citigroup has been brought on board to undertake a strategic review of GES, but all options are open at the moment," 3i spokeswoman Kathryn van der Kroft said on Tuesday.

Citigroup did not immediately respond to a request for comment.

GES builds and maintains wind farms, with clients including Repsol (REP.MC) and Royal Dutch Shell (RDSa.L). It was acquired by 3i in 2006, when Gamesa Corporacion Tecnologica SA (GAM.MC), the Spanish wind turbine manufacturer, spun off its services units.

That transaction gave GES an enterprise value of about 170 million euros. Thomson Reuters Loan Pricing Corp data shows the deal was backed by 140 million euros of buyout loans.

Potential bidders could include engineering heavyweights such as General Electric Co (GE.N), Siemens AG (SIEGn.DE) and Alstom (ALSO.PA), all three of which make turbines but also offer associated services to the wind energy sector.

Some other buyout firms already invest in renewable energy, with Doughty Hanson the owner of LM Wind Power, which makes blades and wind turbines.

European Union energy strategies call for massive increases in both on- and off-shore wind power capacity in the next decade. [ID:nLDE65T1MP]

That explosion in capacity will make wind power Europe's biggest source of renewable energy by 2020, outpacing solar and hydropower combined, according to ENDS Europe.

But this year and next could be challenging; Barclays Capital and HSBC both cut their forecasts for global windpower growth in 2010 and 2011 on Tuesday, citing surplus power generation, sluggish economic growth and regulatory concerns. [ID:nLDE67U10G]

3i values GES's equity at about 203 million pounds, based on Reuters calculations using 3i's last annual report. That report values the 42.8 percent stake held by 3i's publicly listed vehicle at 87 million.

GES provides limited financial information. It made revenues of 732 million euros in 2008 and employed 4,500 people. ($1=.7911 Euro) (Editing by Douwe Miedema and Will Waterman)

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