August 12, 2014 / 3:48 PM / in 6 years

UPDATE 2-Elia, SGCC, Terna and PSP can bid for Greek power grid firm ADMIE-source

* State-controlled PPC selling majority stake in ADMIE

* Three power grid operators, one pension fund can bid

* Elia seeks growth, pursues European grid strategy

* ADMIE CEO says SGCC has significant interest (Adds comment by Elia, background on SGCC and ADMIE)

By Geert De Clercq

PARIS, Aug 12 (Reuters) - Belgian power grid operator Elia, State Grid Corporation of China (SGCC), Italian grid operator Terna and Canadian pension fund PSP Investments have been shortlisted to bid for a 66 percent stake in Greek grid operator ADMIE, a source familiar with the bidding process told Reuters.

Elia is acting in concert with Australian infrastructure investment fund IFM, with whom it bought German grid operator 50Hertz from Sweden’s Vattenfall in 2010. Elia now owns 60 percent of 50Hertz, IFM 40 percent.

“We have been shortlisted for a possible ADMIE bid. We have not made a formal offer yet. The next stage is the due diligence phase,” Elia spokeswoman Barbara Verhaegen said.

Verhaegen said that following the 50Hertz acquisition Elia had always said it was interested in other opportunities to expand in European grids.

“We are a listed company, we are seeking growth,” she added.

ADMIE’s chairman and chief executive Yiannis Yiarentis told Reuters by email that Chinese power grid operator SGCC was one of the parties interested in ADMIE.

“There is indeed significant interest from SGCC for acquiring the 66 percent of ADMIE,” Yiarentis said.

The ADMIE privatisation offers a rare opportunity to acquire a majority stake in a European grid operator.

Five years after the European Commission pushed through the unbundling of power generators from grid operators no major grid player has emerged, despite far-reaching consolidation and cross-border ownership in the power generation industry.

Dutch TenneT, which also bought one of Germany’s four major power grids, is the only other EU grid operator besides Elia to have bought a controlling stake in a large grid in another European country.

Several other grid operators who had been keen to buy stakes in other EU grids have been outbid by infrastructure funds, who are eager to invest in high-voltage transmission lines because of the steady, regulated returns they offer.

In 2012, China’s State Grid bought 25 percent of Portuguese grid operator REN and last month it entered Italy with a deal to buy 35 percent of CDP Reti for at least 2.1 billion euros ($2.8 billion) as part of an investment drive in the Mediterranean.

State-controlled Greek power utility PPC, which owns ADMIE, said in May that it had received five expressions of interest for ADMIE, which runs about 11,000 kilometres (7,000 miles) of high-voltage power lines across the country.

Sources had told Reuters that SGCC, Terna and Elia were among them.

The Greek government wants ADMIE’s buyer to invest 2.5 billion euros to extend its grid to several islands and lay new connections to neighbouring countries such as Italy.

Most Greek islands currently lack links to the mainland grid and therefore depend on polluting, blackout-prone, oil-fired power stations to provide electricity to the millions of tourists they attract each summer. (Editing by James Regan and Greg Mahlich)

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