Ardian offloads Luxembourg utility to Chinese SOE

China Southern Power Grid International will be the second-largest shareholder in Encevo after acquiring the French fund manager’s 25.5% stake.

Paris-based Ardian has exited another investment made through its third infrastructure fund, agreeing to sell Luxembourg utility company Encevo to a wholly owned subsidiary of a Chinese, state-owned power grid company.

China Southern Power Grid International outbid Allianz Capital Partners and Dutch infrastructure fund manager DIF, Infrastructure Investor has learnt.
Ardian did not disclose financial details of the transaction and declined to comment for this story.

The French fund manager initially invested in the European utility in July 2012, paying €330 million for a 23.5 percent stake in the company then known as Enovos from Arcelor Mittal. In 2015, it increased its shareholding, acquiring an additional 2 percent from E.ON and RWE.

During its ownership, Ardian implemented a new strategic plan and a €1 billion investment programme to help Encevo adapt its strategy “to reflect the new shape of European energy markets”, the French firm said.

Based in Luxembourg, the Encevo Group comprises the holding company Encevo SA, energy provider Enovos and grid operator Creos. According to the company website, Enovos is Luxembourg’s main energy supplier and has a strong presence in Germany through its subsidiary Enovos Deutschland.

Creos also has a German presence through its subsidiary, Creos Deutschland, which operates a 1,650km-long gas grid in Saarland and Rhineland-Palatinate and a 420km-long high- and medium-voltage power grid in Saarland.

Upon completion of the transaction – which is expected to close within the next six months, according to a source – CSGI will be the second-largest shareholder in Encevo, after the state of Luxembourg, which owns 28 percent of the utility.

The announcement comes days after the German government prevented China State Grid from buying a 20 percent stake in German transmission system operator 50Hertz, citing national security concerns.