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Enel working with Morgan Stanley to sell Panama assets: sources

 

Italy’s top utility Enel (ENEI.MI) is working with Morgan Stanley to sell its Fortuna hydroelectric plant in Panama as part of broader disposal plans, three sources with knowledge of the matter told Reuters.

The process recently kicked off, the sources said, with Enel inviting possible bidders to submit indicative offers for the business, which is the biggest hydropower station in Panama, two of the sources said.

Enel, Europe’s biggest utility by market value, runs an asset rotation program under which it sells some of its assets to buy others that may offer potentially higher returns. In the period 2017-2019 it plans to sell around 3 billion euros ($3.6 billion) of assets in its portfolio while investing around 4.5 billion euros in new acquisitions. “It’s not an easy asset to sell since there are not many buyers out there,” one of the sources said on condition of anonymity. Another source said Enel was assessing the sale of a series of assets, including the Panama hydropower station.

The source said the deal could fetch up to 1 billion euros.

Enel, which carries group debt of more than 38 billion euros, operates a total of 354 megawatts of renewable capacity in the Central American country, most of it at the 300 MW Fortuna hydro facility. It was not clear if the group’s two solar installations in the country would also be included in the sale package.

In 2016 Enel reported revenues in Panama of around 143 million euros and core earnings of 93 million euros.

Hydropower, as the dominant form of renewable energy, remains a catalyst for growth around the world, providing large amounts of low-cost, reliable power.

Enel declined to comment on Panama but said it constantly assessed options to extract value from its assets. “These options may include continuing asset operations or, should an interesting offer be presented, selling the asset or a part of it. Panama is no exception to this principle,” it said. Last week Enel CEO Francesco Starace said advanced talks were under way to sell three assets in the second half of the year to raise around 600 million-700 million euros but declined to say which. Enel, which controls Spanish utility Endesa (ELE.MC), is looking to distribution grids and green power businesses to drive growth, especially in emerging markets. Last Thursday the utility said its core earnings in the first half fell, partly on drought conditions affecting its hydro power production.

Thomas H. Brymer II
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