Our client, a large French investment fund, was looking to acquire a stake in an energy group based in Luxembourg with operations in Western Europe. The group focuses on electricity and gas transmission and supply, as well as power generation. The group holds a leading position in Luxembourg with strong growth potential in the surrounding markets.
Two main issues arose from the due diligence: (i) understanding how different market regulations influenced profitability and (ii) understanding the pricing structures of the various entities. The team therefore worked closely with the fund to communicate the implications of accounting treatments and regulations influencing the target’s performance – a key source of added value for the engagement. We helped our client to understand how the business worked and how profits could be modelled, and we identified key risks and the main issues relevant to the transaction. Thanks to our input, the fund was able to rely on the figures necessary to make an informed decision.