China Power Giants Pursue $3.6 Billion Finnish GridBy and
Yangtze Power, China Southern Power mull bids for Elenia
Finland’s No. 2 power distributor seeks offers by mid-October
China Southern Power Grid Co. and China Yangtze Power Co. are among companies weighing bids for Finnish power distributor Elenia Oy, which could fetch as much as 3 billion euros ($3.6 billion), people with knowledge of the matter said.
Elenia’s owners have asked suitors to submit non-binding indicative offers by mid-October, according to the people, who asked not to be identified because the information is private. The sale has also drawn interest from State Grid Corp. of China and billionaire Li Ka-shing’s CK Infrastructure Holdings Ltd., as well as global infrastructure investors and pension funds, the people said.
Chinese firms have been stepping up overseas utilities purchases as they are attracted by the target companies’ steady cash flow and technical know-how. Chinese companies have announced $17.2 billion of outbound utilities acquisitions in the past 12 months, data compiled by Bloomberg show.
Elenia, Finland’s second-biggest power distributor, supplies heating and electric power to 420,000 homes and offices in more than 100 municipalities across the country. A group of investors including 3i Group Plc and GS Infrastructure Partners agreed to buy the business in 2011 from Swedish utility Vattenfall AB for 1.54 billion euros.
Representatives for 3i, Elenia and Goldman Sachs declined to comment, while a representative for State Grid said the company currently doesn’t have any information it can disclose on the matter. Representatives for China Southern Power, CK Infrastructure and Yangtze Power didn’t respond to phone calls seeking comment.
China Southern Power Grid has been stepping up its search for offshore assets as it seeks to catch up with more acquisitive domestic rivals like State Grid. Its only foreign completed purchase on record over the past decade was a single $1.5 billion deal in nearby Hong Kong, compared with at least $21.2 billion of outbound acquisitions by State Grid during the period, data compiled by Bloomberg show.
State Grid and China Southern Power Grid are both among early bidders for a minority stake in Chilean utility Transelec SA that could fetch about $1 billion, people familiar with the matter said in July.
Yangtze Power, controlled by hydropower generator China Three Gorges Corp., has a market value of about $50 billion in Shanghai. It had a total installed capacity of 45,495 megawatts at the end of last year, according to the company’s website.
A consortium including CK Infrastructure announced in July the acquisition of German smart meter company Ista International GmbH for about 4.5 billion euros including debt. The company is also considering an offer for U.K. energy producer Cory Riverside Energy Group, people with knowledge of the matter said earlier this month.
— With assistance by Feifei Shen, Prudence Ho, Sarah Syed, and Kati Pohjanpalo