Three Gorges buys Portuguese stake
Updated: 2011-12-24 07:44
By Diao Ying (China Daily)
The Three Gorges Dam in this picture taken on Nov 8. The dam's operator, China Three Gorges Corp, has bought a 21 percent government stake in Portugal's biggest power producer. [Wen Zhenxiao / for China Daily]
BEIJING - China Three Gorges Corp, the country's largest hydropower developer, has bought a 21 percent government stake in Portugal's biggest power producer.
It's the first time that a major Chinese company has sought to join the privatization of southern European nations amid the continent's sovereign debt crisis.
China Three Gorges, the operator of the world's biggest dam, will spend 2.69 billion euros ($3.51 billion) to buy a 21.35 percent stake of Energias de Portugal SA (EDP), according to a statement on the Chinese company's website on Friday.
The deal is part of the Portuguese government's austerity plan. It agreed to sell its shares in State-owned enterprises after a bailout by the European Union and the International Monetary Fund. Selling shares in EDP is its first project according to the agreement and the biggest deal in the austerity program.
The deal, the first of its kind for China's largest clean-energy group, will help the power generator's overseas expansion plans.
It now has projects in Asia and Africa, plus undeveloped business in other continents. Financing the Portuguese company will help it tap into the clean-energy sectors in Europe and Latin America.
"China Three Gorges will cooperate with EDP in the international clean-energy sector," said Cao Guangjing, chairman of the company, in the statement. "Through the high starting point of EDP, the company will enter the markets in Europe, America, and Brazil," he said.
EDP is the major power producer in the European nation, and its annual revenue accounts for 9 percent of Portugal's GDP. It had total assets of 40.49 billion euros at the end of 2010, and made a net profit of 1.23 billion euros last year. It is the main power generator in Brazil, making it an attractive target for China Three Gorges to develop its Latin American business.
The bidding process has been competitive, the company said. Rivals bidders included EON AG, Germany's biggest utility, and Centrais Eletricas Brasileiras SA, the largest State-owned company in Brazil. China Three Gorges made the highest offer among the bidders, about 5 percent higher than its closest competitors, according to the statement.
More deals may follow as weakened European economies seek buyers to help solve their debt dilemmas. Theodoros Georgakelos, the Greek ambassador to China, said that his country's privatization program offers investors opportunities in sectors including tourism, clean-energy, biotechnology and ore mines.
Li Rongrong, the former chairman of China's State-owned Assets Supervision and Administration Commission, said the weak European economy provides investment opportunities for mechanical manufacturing companies in China.