Iceland Mag

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Iceland Mag

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Bid from US private equity firm Blackstone Group to buy Blue Lagoon rejected

By Staff

  • Black rock and blue water The US private equity group Blackstone had hoped to acquire a major stake in one of Iceland's best known tourist attractions. Photo/GVA

The Icelandic pension funds, who own a third of the poplar tourist destination the Blue Lagoon, have vetoed a sale of a 30% stake in the lagoon to an investment fund managed by the US private equity firm Blackstone Group. The 30% stake which Blackstone had hoped to buy was owned by the local utility HS Orka. Blackstone had offered 11 billion ISK (106 million USD/90 million EUR) for the stake.

This is the second sale of a major tourist attraction which is thwarted at the last minute. Earlier this year the Icelandic state used the power of eminent domain to acquire Jökulsárlón glacial lagoon, making it a part of Vatnajökull National Park.

Read more: Investors who had hoped to buy Jökulsárlón glacial lagoon blast its inclusion in National Park

The utility HS Orka, which operates geothermal power plants and the district heating utility on Reykjanes peninsula, had put the 30% stake in the blue lagoon up for sale in May. The highest bid came from a Blackstone Group investment fund, run by one of Blackstone's top managers in Europe, Chad Pike. Pike already has some connections to Iceland, as he owns a luxury hotel in North Iceland, Deplar Farm. 

Before the sale could go through it had to be approved by the board of a holding company Jarðvarmi which owns HS Orka. The Icelandic pension funds own a 33.4% stake in Jarðvarmi, while a Canadian energy company Alterra owns 66.6%. While the Blackstone bid for the Blue Lagoon was significantly higher than HS Orka had hoped to get for the stake, the pension funds decided to veto the sale.

According to the sources of the local newspaper Fréttablaðið the decision by the pension funds to veto the sale has been met with frustration from Alterra.

Read more: Want to buy the Blue Lagoon? 30% stake in Iceland's best known attraction up for sale

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