Belgium's Elia ruins Chinese plans to buy stake in 50Hertz

Wind turbines in the Baltic Sea. Author: Håkan Dahlström. License: Creative Commons, Attribution 2.0 Generic

Belgian transmission system operator (TSO) Elia System Operator NV (EBR:ELI) has chosen to exercise its pre-emption right and raise its stake in 50Hertz Transmission GmbH to 80% from 60%.

Elia announced today that it will acquire the additional 20% stake in Eurogrid International SCRL, 50Hertz’s holding company, from Australian infrastructure fund IFM Investors for EUR 976.5 million (USD 1.2bn). The move would block State Grid Corporation of China’s attempt to buy the same 20% stake from IFM, as reported earlier this year. IFM, in turn, will retain the other 20% in Eurogrid.

50Hertz Transmission is a TSO active in the North and the East of Germany, one of four that operates in the country. The company is responsible for the transportation of the wind power generated by plants in the German Baltic Sea to the onshore power grid. Elia acquired its controlling stake in 50Hertz from Vattenfall in 2010 for an enterprise value of EUR 486 million.

As at the end of 2017, there were 172 wind turbines in the Baltic Sea, with a combined capacity of 692.3 MW, feeding electricity into the German grid, according to statistics by Deutsche WindGuard GmbH.

“Exercising our pre-emption right will add value by increasing our share in the assets in two different countries facing specific challenges in achieving the energy transition,” said Bernard Gustin, chairman of the board of Elia Group. He added that the planned transaction will not impact the tariffs for the end consumer.

Elia anticipates the stake buy to build on its earnings immediately. The company added that it still sticks to its previously agreed CAPEX-plans valued at EUR 2.3 billion in Belgium and EUR 3.3 billion in Germany over the next five years.

The transaction is expected to close in the second quarter of the year, subject to approval by the relevant authorities. Elia noted it plans to finance the purchase via 70% hybrid and 30% senior debt issuance.

(EUR 1.0 = USD 1.234)

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