September 22, 2017 / 10:39 AM / a year ago

Chinese state grid firms to bid for Finland's Elenia - sources

LONDON, Sept 22 (Reuters) - Two state-owned Chinese power grid companies are interested in buying Finland's second-biggest electricity distributor, Elenia Oy, in a deal that could be worth 3 billion euros ($3.6 billion), sources said on Friday.

They said China Southern Power Grid and State Grid Corporation of China, the world's biggest utility, were both lining up bids for the Finnish firm, which Sweden's Vattenfall sold for about 1.5 billion euros in 2012.

Elenia Oy, controlled by Goldman Sachs Infrastructure Partners and 3i Infrastructure, lined up Goldman Sachs and Citi last year to sell the business in what could be one of Europe's biggest infrastructure deals in 2017.

Cash-rich state-owned Chinese companies have made a series of European infrastructure acquisitions ranging from Piraeus Port in Athens to stakes in Britain's Thames Water and power grid operators in Portugal and Greece.

A consortium backed by Australian investment bank Macquarie and German insurer Allianz, as well as Abu Dhabi Investment Authority (ADIA) and fund manager Dalmore Capital are preparing to bid in an auction expected in mid-October, two banking sources said.

Elenia Oy declined to comment. China Southern Power Grid, State Grid Corporation of China, Macquarie, Allianz , ADIA and Dalmore were not immediately available for comment.

The decision to sell the business follows several disposals in recent years of regulated grid businesses by European energy firms seeking to cut debt and raise funds to invest in new infrastructure projects.

Power and gas networks have become an attractive asset class among pension funds and institutional investors as their return is regulated by governments, giving investors a predictable source of income even when an economy is struggling.

The Finnish electricity distributor had annual revenues of 315.3 million euros and earnings before interest, taxes, depreciation and amortisation of 168.4 million euros in 2016. It services some 420,000 customers in more than 100 municipalities. ($1 = 0.8336 euros) (Reporting by Arno Schuetze in Frankfurt, Dasha Afanasieva and Clara Denina in London; additional reporting by Tuomas Forsell in Helsinki and the Beijing newsroom. editing by David Clarke)

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