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KfW bank to purchase 20 per cent stake in TSO 50Hertz from Elia [free access]

July 31, 2018

Belgian transmission system operator (TSO) Elia System Operator SA plans to buy 20 per cent stake in German TSO 50Hertz Transmission GmbH from Australian investment manager IFM Global Infrastructure Fund, increasing the former’s stake in the German TSO to 80 per cent.

 

As reported, Elia has exercised its pre-emption right on the 20 per cent stake in Eurogrid International, which is the holding company of 50Hertz. IFM continues to hold the remaining 20 per cent share in Eurogrid.

 

Immediately after buying the stake from IFM, Elia will sell it to German state-owned development bank KfW at the same financial conditions.

 

According to the German government, KfW will make the investment for security reasons and that it is only a temporary measure. The plan is to sell the shares again in the future. This move has allowed Germany to block the latest effort by China’s State Grid Corporation of China (SGCC) to buy into the TSO.

 

Elia increased its 50Hertz stake to 80 per cent from 60 per cent in April 2018 for about EUR989 million. However, the Belgian TSO did not consider buying the remaining 20 per cent of 50Hertz at the same terms to be necessary from a strategic and financial perspective.

 

Elia is expected to close all transactions in the third quarter of 2018. It will finance the acquisition of 20 per cent of Eurogrid through the issue of long-term debt instruments, including EUR700 million of hybrid bonds and EUR300 million of unsubordinated senior bonds.

 

(EUR1=USD1.20)