State Grid bid for Greek utility stake is highest

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 11,000 km of 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 on Monday, formally declaring SGID as the preferred investor. PPC's shareholders will meet on Nov 24 to make the final decision.

The deal is expected to be concluded by March, PPC said. SGID did not make any statement till late Thursday.

Under Greece's bailout agreement struck in 2015, 51 percent state-owned PPC will either sell its 100 percent stake in ADMIE or 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. "The motivation 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.