Italy to sell energy grid stake to China for 2b euros

State sales

The deal adds to a series of European infrastructure acquisitions by cash-rich Chinese groups whose investments have ranged from the port of Piraeus in Athens to stakes in Thames Water in Britain and Portugal's power grid operator REN.

In Italy, the People's Bank of China (PBOC) acquired stakes of around 2 percent in Italian state-owned energy companies Eni and Enel in March, worth 1.5 billion euros and 825 million euros respectively at current market prices.

In May, Shanghai Electric Group paid 400 million euros to buy a 40 percent stake in power engineering company Ansaldo Energia.

Italy's Treasury, which owns 80 percent of CDP, has pledged to raise around 11 billion euros from disposals this year but has so far pocketed nothing. The state lender's initial plan envisaged the sale of up to 49 percent of CDP Reti to raise some 3 billion euros.

But some international investors who had originally expressed interest in the grid assets later backtracked due to concern over governance issues and that it would be difficult to sell a stake in CDP Reti at a later date since it is not listed.

CDP will now seek to sell a series of smaller stakes to funds to meet the 49 percent target, according to sources.

On Wednesday sources told Reuters CDP Reti would receive a loan of around 1.5 billion euros prior to the sale to pay a special dividend to its parent company and to reduce the price tag as an incentive for China's State Grid.

It is unclear at this stage whether CDP will pass on part of the cash payment to the Italian government, which is trying to cut the world's fourth-largest public debt pile.

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