UPDATE 2-Allianz, Borealis to buy RWE's Net4Gas for $2 bln

Thu Mar 28, 2013 1:39pm EDT

* Consortium will acquire shares for close to 1.6 bln eur

* Price includes 400 mln eur debt

* Net4Gas operates over 3,600 km of Czech pipelines

* Transaction expected to close in H2 2013 (Rewrites first paragarph, adds detail on price, Allianz comment, Hungarian deal, background)

By Christoph Steitz

FRANKFURT, March 28 (Reuters) - German insurer Allianz SE and a Canadian investor agreed to pay some 1.6 billion euros ($2 billion) including debt for a Czech gas pipeline operator, as financial investors flock to such assets in search of safe returns.

The purchase of RWE AG's Net4Gas unit is the latest in a string of acquisitions in the field of power and gas grids, which are attracting pension funds and insurers due the promise of steady returns amid low bond yields and volatile equities.

It is also one of a series of asset disposals by RWE, burdened by debt and pressured by Germany's decision to quit nuclear energy.

Allianz, together with Canada's Borealis, beat two privately held Czech groups - EPH and KKCG - which had been seen as favourites in the race for the firm, which transports mainly Russian gas for customers in the Czech Republic and western Europe, mainly Germany.

"With the sale to Allianz and Borealis ... we have succeeded to find a very reliable long-term investor for Net4Gas," RWE Chief Executive Peter Terium said on Thursday.

A Czech government official said earlier this week the central European country would welcome stable western investors such as Allianz and Borealis in the country's gas transportation network.

Sources familiar with the talks had told Reuters on Wednesday that Allianz and Borealis were close to signing a deal to buy Net4Gas.

An RWE spokeswoman said the 1.6 billion euro price tag included about 400 million euros in debt, which put the cash element of the deal at close to 1.2 billion.

EUROPEAN PORTFOLIO

Allianz said it and Borealis - the infrastructure investment arm of the Ontario Municipal Employees Retirement System (OMERS) - will each own 50 percent of Net4Gas.

Borealis Infrastructure President and CEO Michael Rolland said the deal expanded a European portfolio which already included investments in Associated British Ports and other assets.

Other financial investors, including Australia's Macquarie and German reinsurer Munich Re, have also started to invest in regulated infrastructure assets, including gas and power grids, and other deals are possible in the sector.

People familiar with the matter said French gas and power group GDF Suez could sell a stake in its gas transport unit GRTgaz to reduce debt, while German gas firm VNG is planning to sell its gas transmission system operator Ontras.

In another deal in the sector, more in line with a regulatory crackdown in eastern Europe on gas firms and increasing government control, Hungary signed a deal on Thursday to buy local gas units of Germany's E.ON.

Net4Gas operates more than 3,600 km of pipelines - including links from Russia via Slovakia and the Nordstream pipeline - and employs more than 500.

RWE expects the transaction to close in the second half of the year.

Burdened by 33 billion euros of debt and Germany's decision to exit nuclear energy, RWE is selling billions of euros in assets, including its oil and gas exploration unit DEA . ($1 = 0.7824 euros) ($1 = 0.7788 euros) (Addtional reporting by Jan Korselt and Jonathan Gould; Writing by Jan Lopatka; Editing by Maria Sheahan and David Holmes)

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