June 19, 2018 / 2:07 PM / 3 months ago

UPDATE 1-Germany considering ways to fend off State Grid investment - source

* Options could involve state-owned bank KfW - source

* State Grid keen on 20 pct stake in 50Hertz - sources

* Chinese group failed to buy stake previously (Recasts, adds info from sources)

FRANKFURT, June 19 (Reuters) - Germany is considering options to prevent Chinese utility State Grid from buying a 20 percent stake in local network operator 50Hertz, which is majority-owned by Belgium’s Elia, a government source familiar with the matter said.

The person said several options were being considered and German state-owned development bank KfW could play a role in deliberations. The source did not give further details.

State Grid had previously tried to buy a 20 percent stake in 50Hertz from Australian infrastructure fund IFM but failed after Elia exercised a pre-emptive right, thereby raising its stake to 80 percent.

IFM now wants to sell its remaining 20 percent stake and has already struck an agreement to sell it to State Grid, sources have said. Elia has until the end of July to decide whether it wants to pre-empt again.

State Grid’s interest in 50Hertz is viewed critically by Berlin. German Economy Minister Peter Altmaier said last week he saw a problem in letting critical infrastructure fall into the hands of investors whose motivation and background were not clear, citing 50Hertz as an example.

German business paper Handelsblatt earlier reported that Elia could buy the remaining stake and hand it over to KfW to ensure State Grid did not obtain it. The paper cited people close to the negotiations.

Elia in March paid 976.5 million euros ($1.1 billion) to IFM for a 20 percent stake in 50Hertz.

Elia, 50Hertz, Germany’s Economy Ministry and State Grid all declined to comment.

$1 = 0.8654 euros Reporting by Christoph Steitz, Gernot Heller, Tom Kaeckenhoff and Robert-Jan Bartunek; Editing by Sabine Wollrab and Edmund Blair

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