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Interview with Doris Barnert, Head of Corporate Services and CFO of Swissgrid
In accordance with the requirements of the Electricity Supply Act, the national grid company Swissgrid is the owner of the Swiss extra-high voltage grid. To achieve this, the previous owners had to transfer their assets of the extra-high voltage grid to Swissgrid. This has been completed since the beginning of 2013 as part of the largest and most complex transaction to date stipulated by law in Switzerland, at a cost of around CHF 3 billion.
With the availability of the relevant ElCom rulings regarding the final regulatory values at the respective transaction dates, the transaction, whose preparatory work started in 2010, could be completed in 2022. IFBC has supported Swissgrid and the former owners since the beginning of the transaction. On the one hand, IFBC drafted the necessary valuation concepts for the transfer of the specially established network companies (share deals) as well as for the other assets (asset deals). This includes the details of the compensation by means of Swissgrid shares and loans. On the other hand, IFBC carried out all valuation tasks and determined the respective compensation based on the legal basis or the values mandated by ElCom. In the case of the share deals, these tasks began before the transaction date on January 1, 2013 with initial valuations, followed by an initial valuation adjustment based on the ElCom rulings at that time on the asset values, and concluded with the final valuation adjustment after the final ElCom rulings were available at the transaction date. The valuations of the additional assets, which were transferred to Swissgrid as part of the asset deals, were performed by IFBC on an annual basis until 2018.
Below, Doris Barnert, Head of Corporate Services and CFO of Swissgrid, describes her experience regarding the successful transaction.
The entire project team and I are delighted that the transfer has now come to a successful conclusion following the final rulings of ElCom, which will come into legal force in 2021. We were convinced from the outset that the transaction would be concluded successfully with the chosen approach. However, no one expected the transaction to take so long. The go-ahead was given when the Electricity Supply Act came into force in 2007. The Act obliged the electricity supply companies to unbundle their transmission grid areas from their other areas of activity and to transfer them to Swissgrid by the end of 2012 at the latest. The transfer of all the extra-high voltage grid facilities to Swissgrid involved the takeover of more than 130 switchgears and over 6,700 km of grid. A total of around 40 parties were involved. This makes the grid takeover the largest transaction in recent economic history and certainly one of the most challenging takeover transactions in Switzerland.
I consider the interaction of the many different factors to be the greatest challenge of this transaction. As already mentioned, Swissgrid took over parts of the extra-high voltage network from various parties. Not all the previous network owners were ready for the transfer at the same time, and we had to wait for several court rulings from various instances as well as the final rulings from ElCom before the final values could be calculated. Thus, the transfer was staggered over several years, which explains the long duration of the transaction. The subsequent (sales) processing of the transfers that had already taken place also contributed to the complexity. The procedure for the transfer and the valuation of the assets had to be uniform to ensure equal treatment of all parties. Against this background, specific concepts and uniform contractual documents were developed for the main steps of the transfer in cooperation with all parties involved. As you can imagine, it took some convincing until the transaction documents were in place.
The good and constructive cooperation between the various parties was key for the successful transfer. Joint solutions were always found for the various challenges that arose, particularly in the technical area. This was achieved by forming specific teams at an early stage with specialists from Swissgrid and the former owners of Swissgrid as well as external experts. They dealt in each case with the areas of law, valuation, taxes, and investments. It was also helpful that a model grid was defined for the delineation of assets and that due diligence was executed according to a uniform model. The know-how for the transfer was distributed among various people. Most of these know-how carriers remained involved until the transaction was completed.
This transaction was extraordinary because Swissgrid, as the buyer, was faced with various sellers. This constellation made it essential to establish a concept for the transfer of all assets and, in particular, a uniform valuation and thus equal treatment of all parties which was capable to achieve a majority. The valuation was based on the regulatory requirements of the StromVG, StromVV and ElCom. Any interest claims that arose in the share deals due to the different timing of contributions in kind (3.1.2013) and final valuation of the contributions in kind (1.1.2021) also followed the regulatory provisions. To conclude the transaction, a fairness opinion was issued by an independent party, confirming the correct application of the valuation concept and implementation of the valuations.
In the valuation concept at that time, the principles for the valuation were defined and accepted by all parties involved (18 contributors in kind and Swissgrid). The details for the initial valuations and for the specific price adjustment mechanism were determined. In particular, the details for the second and final valuation adjustment were not regulated in the valuation concept at that time. These were only defined before the final valuation adjustment was conducted, at the same time as the necessary contract adjustments were initiated.
Throughout the entire project, we perceived IFBC as a reliable and extremely competent partner who grasped complex and complicated financial issues in a holistic manner and developed implementable solutions in a timely manner. IFBC was accepted as an independent expert by the contributors in kind from the very beginning, which contributed significantly to the success of the transaction.
On the one hand, I would like to point to Europe: As part of the interconnected grid, Switzerland is highly affected by developments in the European electricity market. Due to the lack of an electricity agreement, Swissgrid can only play a limited role in developments in the European electricity market and represent the country’s interests. This has a negative impact on grid security. For Swissgrid, access to important committees and control energy cooperations is also at risk. Secondly, the long approval procedures for infrastructure projects are a major problem. The electricity system is undergoing a profound transformation with the decarbonization and decentralization of production. The transmission grid is a key factor for the success of the energy transition. That is why we must be able to implement the necessary infrastructure projects quickly.
Doris Barnert holds a degree in architecture from ETH Zurich, an MAS in corporate finance and an Executive MBA HSG. After first working in the field of architecture, she joined the Infrastructure Division of SBB in 2001, where she subsequently held various leadership and project management positions. In 2006, she was appointed Head of Finance for Western Switzerland in the Infrastructure Division. In December 2008, she joined Solothurner Spitäler AG as Director of Finance (CFO) and member of the Executive Board. In this function, she built up the finance department, continuously developed it and played a key role in shaping it. Doris Barnert has been appointed member of the Executive Board and Head of Corporate Services / CFO of Swissgrid as of April 1, 2017.
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