Finnish energy group Fortum is to sell its electricity distribution business and its heat divisions in a €340m divestment.

The company’s Norwegian electricity distribution arms will be bought by power group Hafslund, listed on the Oslo Stock Exchange, and its heat businesses will be sold to investment company iCON Infrastructure Partners II.

Fortum has also agreed to sell its 49 per cent stake in Fredrikstad Energi and its 35 per cent share of Fredrikstad Energi Nett to Hafslund. The two power companies operate in the municipality of Fredrikstad.

The €340m sell-off is on a debt- and cash-free basis and Fortum expects to complete deals during the second quarter of this year.

Fortum’s Norwegian electricity distribution grids are located in the Østfold area and deliver around 2.6 TW/hrs of electricity to approximately 103, 000 customers. A total of 96 employees will be unaffected by the sale.

Fortum’s heat business comprises heat production and sales as well as district heat and cooling activities. Heat production capacity consists mainly of heat pumps and business-to-business heat plants with a combined capacity of 210 MW.

The move is part of Fortum’s strategy to offload grid holdings and concentrate on power generation. Fortum earlier sold its Finnish power grid for €2.55bn and is looking to sell its Swedish distribution network, which could bring in substantially more.