On 22 March 2022, Hafslund Eco, Infranode and HitecVision announced that they have entered into an agreement with Fortum Oyj to purchase Fortum's 50% share in Fortum Oslo Varme. Fortum Oslo Varme is currently owned by the City of Oslo and Fortum (50/50) and is Norway's largest producer of district heating. It supplied 36% of district heating generated in Norway in 2021. As part of the transaction, the City of Oslo (the 100% owner of Hafslund Eco) will transfer its 50% stake in Fortum Oslo Varme to Hafslund Eco. Following the transaction, Hafslund Eco will become the majority owner with 60% in Fortum Oslo Varme, while Infranode and HitecVision will own 20% each. The transaction will increase Hafslund Eco’s energy production by almost 2 TWh annually, and will also secure ownership to important infrastructure in the Oslo region. Through its share in Eidsiva Energi, Hafslund Eco currently also owns district heating business in Innlandet county.

The transaction details imply a payment for Hafslund Eco of about NOK 2bn for the 10% share it buys from Fortum. The 50% share from the City of Oslo will be transferred to Hafslund Eco as a property contribution, and Hafslund Eco will take over NOK 2bn in shareholder loans from the City of Oslo. The transaction has been approved by the companies involved and must yet be approved by Oslo City Council and the Norwegian Competition Authority before it can be carried out. For reference, we note that Fortum Oslo Varme obtained a comparable EBITDA of almost NOK 0.9bn in total last year.

Following very high energy prices in H2 2021, Hafslund Eco exceeded Scope’s base case scenario for 2021 in terms of EBITDA and cash flow generation, thus resulting in lower-than-expected leverage. The transaction will therefore allow Hafslund Eco to complete the acquisition well within Scope’s previous medium-term leverage forecast.

This monitoring note does not constitute a rating action, nor does it indicate the likelihood of a credit rating action in the short term. For the official credit rating action release click here. On 9 July 2021, Scope assigned its issuer rating of BBB+/Stable on Hafslund Eco AS.