UTILITY group Scottish & Southern Energy (SSE) is in the early stages of evaluating a takeover bid for Energia, Ireland’s largest independent power company.

Dresdner Kleinwort will kick-start the £2 billion auction of the business this week when it sends out information memorandums to prospective bidders, including major UK and continental utility groups, as well as select financial buyers.

Arcapita, the Bahrain investment firm that owns Energia’s mother company Viridian, decided to put the business up for sale after a strategic review by Dresdner. The bank has already circulated a teaser document among prospective bidders to gauge interest. Indicative bids are expected to be lodged by the middle of next month. Arcapita declined to comment.

Sources close to the situation said that SSE is the early favourite to win Energia, which has more than 35,000 customers. SSE chief executive Ian Marchant has made expanding into Ireland a top strategic priority, and the company is thought to be in the running for power plants being auctioned by the Electricity Supply Board, Ireland’s state-owned power group. Endesa, another bidder for the ESB assets, is expected to pursue the business, as is German giant Eon, according to Will Ainger of energy intelligence service SparkSpread.

If Energia fetches the £1.75 billion to £2 billion that Arcapita wants, the deal would be a major success for the investment firm. Arcapita paid £1.62 billion for the whole of Viridian less than two years ago. Once the sale is complete, Viridian would be left with assets that include Northern Ireland Electricity, the transmission and distribution grid.

The auction is likely to take several months but sources said it should be done before year-end.

Amec, meanwhile, has put its wind-farm unit up for sale, heralding an ignominious end to the engineering group’s eight-year effort to build itself into one of the industry’s top players. It has hired Rothschild to auction the business, which it hopes will fetch an initial price of up to £20m plus up to another £40m depending on whether projects get planning approval and are built.

If it is sold, it will be the latest in a string of divestments made by chief executive Samir Brikho in an effort to streamline the group. Amec first got into the wind business when it acquired Border Wind in 2000. It has 380Mwh worth of projects in various stages of planning but thus far only one has been approved, the Edinbane development on the Isle of Skye in northwest Scotland.

The decision to exit comes just three months after the Scottish Executive rejected Amec’s flagship project, a 680Mw wind farm on the Isle of Lewis.

£2bn - the amount Arcapita hopes to get from the sale of Energia

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