EDF to sell UK power network in £5.8bn deal
BILLIONAIRE Li Ka-shing has offered to buy UK power grids from France’s EDF for £5.8bn, giving his companies a foothold in more lucrative overseas markets.
Cheung Kong Infrastructure and Hongkong Electric said they won an auction for three power distribution grids and private power networks owned in Britain by EDF, the world’s second-largest utility.
EDF’s UK unit, EDF Energy Networks, distributes electricity to 7.8m customers and generates around a fifth of Britain’s electricity.
The acquisition covers firms that distribute electricity in southeast and eastern England, including London, and provide power-related infrastructure services under long-term contracts.
The announcement in Hong Kong confirmed an earlier Reuters story from sources, one of whom said the deal was the biggest North East Asian investment into Europe.
Utilities throughout Europe are shedding assets to pay for billions of euros of takeovers and to raise money to invest in new power plants.
The deal, which is subject to regulatory approvals, comes as part of a slew of grid sales in Europe, partly for regulatory reasons and partly because the assets no longer provide the returns the utilities have expected.
“It fits the bill,” said Macquarie analyst Wei Sim, referring to the acquisition. “That’s the type of asset they’re looking for – in English-speaking, OECD countries. Historically, where they’ve gone wrong was in greenfield projects, but these are long-term contracts with regulated returns.”
CKI and HKE would each hold 40 per cent of the entity buying the UK assets, with the rest held by two foundations controlled by Li, the companies said in a statement in Hong Kong.
In Paris, EDF confirmed it received an offer from the Hong Kong companies for the British assets.