State Grid bid for Greek util­ity stake is high­est

China Daily (USA) - - BUSINESS - By ZHENG XIN zhengxin@chi­nadaily.com.cn

Greece’s state-backed Pub­lic Power Cor­po­ra­tion said on Wed­nes­day that China’s State Grid In­ter­na­tional De­vel­op­ment Ltd’s bid for a stake in its sub­sidiary ADMIE has emerged as the high­est.

SGID, a wholly owned sub­sidiary of State Grid Cor­po­ra­tion of China, is the sole ve­hi­cle for the lat­ter’s in­vest­ments abroad in trans­mis­sion and dis­tri­bu­tion.

It bid 320 mil­lion eu­ros ($349 mil­lion) for a 24 per­cent stake in ADMIE, valu­ing the PPC’s power grid unit at $1.45 bil­lion.

Ac­cord­ing to Reuters, ADMIE, which op­er­ates more than 11,000kmof high-volt­age power ca­bles in Greece, earned an op­er­at­ing profit of of 155 mil­lion eu­ros last year. It had a reg­u­lated as­set base of 1.4 bil­lion eu­ros and a to­tal debt of 490 mil­lion eu­ros.

A con­sor­tium led by Ital­ian power grid Terna also bid an undis­closed amount for the ADMIE stake last week. But French power grid op­er­a­tor RTE, which was ini­tially among the short­listed in­vestors, did not make a bid.

PPC’s board of di­rec­tors will now val­i­date the bids onMon­day, for­mally declar­ing SGID as the pre­ferred in­vestor. PPC’s share­hold­ers will meet onNov 24 to make the fi­nal de­ci­sion.

The deal is ex­pected to be con­cluded byMarch, PPC­said. SGID did not make any state­ment till late Thurs­day. Joseph Ja­co­belli,

Un­der Greece’s bailout agree­ment struck in 2015, 51 per­cent state-owned PPC will ei­ther sell its 100 per­cent stake in­ADMIEor fully pri­va­tize the grid by next year.

Joseph Ja­co­belli, se­nior an­a­lyst with Asia Util­i­ties and In­fra­struc­ture Re­search of Bloomberg In­tel­li­gence, said SGID’s bid is in line with the trend of Chi­nese power com­pa­nies in­vest­ing abroad.

“Many of these com­pa­nies are mo­ti­vated to ac­quire ex­ist­ing power as­sets abroad or even build green­field ones,” Ja­co­belli said. “The­mo­ti­va­tion stems from at least three fac­tors: a strong bal­ance sheet; the home power mar­ket see­ing weak con­sump­tion; and over­sup­ply which should en­cour­age them to di­ver­sify earn­ing out­side China.”

Also, there is good pol­icy sup­port for over­seas ex­pan­sion, in­clud­ing be­ing able to get fi­nanc­ing from key fi­nan­cial in­sti­tu­tions like the China De­vel­op­ment Bank, he said.

Zhou Ruo­jun, com­mer­cial coun­selor of the Chi­nese em­bassy in Athens, Greece, said in a pre­vi­ous in­ter­view that the Greek econ­omy is re­cov­er­ing grad­u­ally, so more Chi­nese com­pa­nies will seek to in­vest and ex­e­cute projects in the east Euro­pean coun­try.

Many Chi­nese com­pa­nies have a grow­ing in­ter­est in the en­ergy, ho­tels and con­struc­tion sec­tors of Greece. Cosco Ship­ping’s re­cent ac­qui­si­tion of a 51 per­cent stake in the op­er­at­ing com­pany of Greece’s big­gest port shows the grow­ing con­fi­dence of Chi­nese in­vestors in Greece’s fu­ture, he said.

Many of these com­pa­nies are mo­ti­vated to ac­quire ex­ist­ing power as­sets abroad...”

se­nior an­a­lyst with Asia Util­i­ties and In­fra­struc­ture Re­search of Bloomberg In­tel­li­gence

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