Five bid for Enel’s Elettrogen generating subsidiary

Enel, the Italian state-owned power group, confirmed on Friday that five bids had been submitted for its Elettrogen electricity generating subsidiary, which is one of three units being divested as required by the Italian government. The only bidder to have confirmed interest is Spanish utility Endesa, which issued a statement on behalf of an international consortium.

Elettrogen is being sold under measures approved by the Italian government in 1999. Enel will have to sell its Eurogen and Interpower subsidiaries in due course. Elettrogen has an installed capacity of 5418 MW, of which 4424 MW are thermal and 1014 MW correspond to hydroelectric plants. Its workforce is 1721 and its average annual production is 17 000 GWh.

Spain’s Iberdrola had shown interest in Elettrogen but in a statement last week, Ignacio Sanchez Galan, Iberdrola chief executive, said it had pulled out of the bidding process as Elettrogen did nor appear attractive to his company in terms of its assets or its profitability.

In addition to Endesa’s interest, the remaining bidders are thought to be Italy’s Edison and Sondel – part of the Montedison group, AES group from the US, the Italpower consortium, made up of Italian banking interests together with Italian and Swiss utilities and Franco-Polish investor Romain Zaleski.

Endesa said it had submitted a binding offer for the Elettrogen as part of a consortium in which Banco Santander Central Hispano and the Italian ASM Brescia SPA also participate. Endesa is the strategic and reference partner in the consortium.

Banco Santander Central Hispano, takes part in the consortium as financial partner with a stake between 30 and 40 per cent, between 15 per cent and 20 per cent for the Italian ASM Brescia SPA and the remainder for Endesa, which in any case will be the majority shareholder. The final shareholding structure should be determined once and if Elettrogen is finally awarded to the consortium.

ASM Brescia SPA is one of the four leading municipal utilities in Italy. It is 100 per cent owned by the Council of Brescia, a city located in northern Italy. The company has its own generation plants and distributes electricity, water and gas to around 400 000 customers in the region.

At the moment no deadlines have yet been set for the final awarding. Nevertheless a 90-day term starts today, during which Enel will evaluate the offers, taking into account not only the price offered but also other factors which Enel deems relevant. Enel may award Elettrogen directly to the companies or consortia that have submitted binding offers or open a negotiation process for the final awarding, which will need to be ratified by the Italian Government.

Endesa has been building its presence in Europe through successive transactions such as the acquisition of 30 per cent of the French SNET – which owns nine coal-fired plants with a total capacity of 2603 MW. It has also signed a purchase agreement for the Dutch electricity and gas distributors REMU and NRE, which is pending a decision from the Dutch parliament.

Endesa is the first Spanish electric utility with eligible customers in Portugal, France and Italy and a licence for electricity supply in Germany. It is also present in two wholesale markets, the Dutch-based Amsterdam power Exchange (APX) and the Polish Gielda Energii.

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