October 24, 2019 / 12:48 PM / 23 days ago

Five groups line up final bids for EDP unit ahead of mid-November deadline: sources

LONDON (Reuters) - German investment firm Aquila Capital has emerged as one of five parties shortlisted to submit binding offers for EDP-Energia de Portugal’s (EDP.LS) hydro assets, worth around 2 billion euros, ahead of a mid-November deadline, sources said.

The renewables and infrastructure firm, which bought 21 hydropower plants from EDP last year, joined Spanish utility Iberdrola (IBE.MC), Norway’s hydropower company Statkraft, Austria’s largest electricity provider Verbund (VERB.VI) and France’s Engie (ENGIE.PA) in making it to the final round of the auction.

Aquila and Engie were not immediately available to comment. EDP, Iberdrola and Statkraft declined to comment.

Verbund said in September it had made it to the shortlist of final bidders.

The sale, led by Morgan Stanley and UBS, had drawn initial interest from other European utilities and investment funds including Enel (ENEI.MI), via its Iberian unit Endesa (ELE.MC), Macquarie and Brookfield. They however decided to withdraw from the auction, the sources said.

EDP is looking to plough more cash into its renewable energy business and selling the hydro assets is part of a wider clean-up of assets in Portugal and Spain. EDP’s operations at home account for 90 percent of electricity generation and distribution in Portugal.

Portugal’s largest listed company has been under pressure to reduce its debt load since becoming a takeover target and attracting an activist shareholder in 2018.

After a 9 billion euro takeover bid from Chinese power giant China Three Gorges (CTG), which owns a 23% stake, was rejected by EDP shareholders, activist investor Elliott launched an alternative plan for the utility to divest assets across Brazil, Portugal and Spain. Elliott holds a 2.9% stake in EDP.

EDP’s turnaround plan involves a further 4 billion euros via an asset rotation program until 2022. It intends to spend around 12 billion euros between 2019 and 2022 to fund its expansion in renewable energy.

Reporting by Sergio Goncalves, Clara Denina, Arno Schuetze, Andres Gonzalez; additional reporting by Alexandra Schwarz-Goerlich and Nerijus Adomaitis; editing by David Evans

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