May 10, 2018 / 11:35 AM / 13 days ago

IFM in talks to sell remaining 20 percent of Germany's 50Hertz to China's State Grid: sources

LONDON/FRANKFURT (Reuters) - Australian infrastructure fund IFM is in talks to sell its remaining 20 percent stake in German network operator 50Hertz to China’s State Grid [STGRD.UL] after existing shareholder Elia snapped up the first 20 percent stake, sources said.

In March, Belgium’s Elia (ELI.BR) said it had decided to exercise its right to buy a 20 percent stake in the high-voltage energy network operator for 976.5 million euros beating China’s State Grid, who was also interested.

Sources said the renewed talks between IFM and State Grid were in early stages but much of the preparation had already been completed before the previous sale.

“They had negotiated for one year before Elia came in and scuppered that deal, were very determined,” one of the sources said about the Chinese utility monopoly.

A spokesman for IFM and a spokeswoman for State Grid in Germany declined to comment.

    Sources familiar with the deal had expected that Elia would not have the firepower for such a large transaction and it was unclear whether it would once again defeat the Chinese state company by exercising its pre-emption rights.

    Elia declined to comment.

    State Grid’s interest in the first 20 percent stake had been viewed critically by German politicians, amid fears that China was taking control of key technologies while protecting its own companies against foreign takeovers.

    IFM and Elia bought 50Hertz from Swedish utility Vattenfall [VATN.UL] in 2010 for 810 million euros, meaning IFM was able to sell a 20 percent stake at six times the amount it paid.

    Additional reporting by Kane Wu in Hong Kong; Editing by Edmund Blair

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