Vattenfall readies $4 billion in sell-offs - sources

LONDON/AMSTERDAM (Reuters) - Vattenfall AB, Europe's fifth-largest electricity producer, has hired investment banks to sell businesses worth more than 3 billion euros (2.5 billion pounds), people familiar with the matter said. The state-owned Swedish power giant has been reviewing "non-core" businesses since September, as it looks to boost profitability partly by reversing a decade of overseas expansion.

Vattenfall wants to bolster its balance sheet, cut carbon emissions and sharpen its focus on three key markets -- Sweden, Germany and the Netherlands.

Vattenfall hired Deutsche Bank to lead the disposal of non-core businesses in Poland, Finland and Denmark, the people said. Deutsche will work with Danske Bank on the Danish and Finnish sales, and with ING in Poland, they added.

Boutique Banca Leonardo will advise on the sale of a smaller business in Belgium and Jefferies will advise on the sale of upstream gas assets, some of the people said.

"We have started the process to evaluate potential divestments of assets in our non-core countries," Vattenfall spokesman Ivo Banek said in an email. "(We) at this stage are not able to disclose information on our financial advisors or the estimated value of the assets."

All five of the banks named either declined to comment, had no immediate comment or did not immediately respond to a request for comment.

GRIDS AND POWER PLANTS

The potential Polish sales, including a heat and power plant in Warsaw and a electricity distribution network in the south, could fetch as much as 1.5 billion euros, two of the people said.

Poland's state-controlled utility Tauron, gas monopoly PGNiG , Finland's Fortum, and Czech private equity fund Penta have all expressed interest in at least parts of the Polish business.

In Denmark, non-core sales could net Vattenfall 500 million euros, the two people added. It will keep its windpower business there -- which boasts more than 400 turbines -- but seek to sell its thermal power business, which has five combined heat and power (CHP) plants.

Vattenfall's non-core Finnish business, chiefly an electricity distribution network that is the country's second-biggest, could fetch about 1 billion euros, three of the people said. The grid's regulated returns mean it could draw interest from infrastructure funds and other financial buyers.

The Belgian and upstream sales are probably smaller, and both stem from Vattenfall's biggest-ever takeover, its 2009 purchase of the production and supply arms of Dutch rival Nuon.

Vattenfall became Belgium's third-largest electricity and gas-market supplier after buying Nuon, and also acquired stakes in dozens of Dutch North sea gas fields.

A year earlier, Nuon had bought stakes in 35 gas fields from ConocoPhillips, the third-largest U.S. oil company, for 476.7 million euros.

Earlier this month, Vattenfall reported fourth-quarter operating earnings of 4.95 billion Swedish crowns (475 million pounds), down almost 15 percent from the previous quarter. It warned that rising prices for oil, gas and coal would put pressure on margins in the years ahead.

(Reporting by Quentin Webb in London and Greg Roumeliotis in Amsterdam; additional reporting by Philipp Halstrick in Frankfurt; Editing by Steve Slater, Erica Billingham and Jane Merriman)