Actis, Engie Vie With Blackstone Unit for Egyptian Power Plants
Actis, Engie Vie With Blackstone Unit for Egyptian Power Plants
(Bloomberg) -- Actis LLP and Engie SA have joined a unit of Blackstone Group Inc. in competing to take over three Egyptian power plants co-built by Siemens AG, a deal that might spark greater foreign investment in the Middle East’s fastest-growing economy.
Whichever of the six international companies prove successful in their bids will work alongside Egypt’s new sovereign wealth fund, which plans to acquire roughly 30% of the state-owned facilities that cost about 6 billion euros ($6.6 billion) to build and the North African nation inaugurated in mid-2018.
France-based Engie told Bloomberg it had submitted an expression of interest in the plants, which have a total capacity of 14.4 gigawatts. China Datang Overseas Investment Co. Ltd. and London-based Actis have also registered interest, according to three people familiar with the plans.
They’re facing tight competition: Egyptian Electricity Minister Mohamed Shaker said in May that Blackstone’s Zarou Ltd. and Edra Power Holdings Sdn Bhd of Malaysia are also bidding for role. The head of the wealth fund, Ayman Soliman, has said that half a dozen firms are competing, but declined to identify them. The name of the sixth isn’t clear.
The plants, operated by Siemens until 2024, are part of a series of mammoth projects introduced by President Abdel-Fattah El-Sisi that also include a Suez Canal extension and a new administrative capital. A deal could spur further foreign investment in Egypt, which has struggled beyond the oil and gas industry, and help ease the nation’s debt burden. Financing for the plants came via a consortium including Deutsche Bank AG, HSBC Holdings Plc and KfW-IPEX Bank AG, backed by a sovereign guarantee.
Repeated phone calls to China Datang’s headquarters in Beijing went unanswered. Actis declined to comment.
Egypt will select a financial adviser for the deal next week, which will then arrange negotiations with the interested companies, Soliman said in an interview, declining to identify any of the potential advisers. He expects the pact to be finalized in 2020.
HSBC and Citigroup Inc. have bid for the role, while Zarou hired JPMorgan Chase & Co. and Edra enlisted Standard Chartered Plc, according to the three people. The World Bank’s International Finance Corp. has submitted a proposal to “advise on attracting private investors to this project upon request from the Egyptian government,” country manager Walid Labadi said by email.
Neither London-based Zarou, Edra, nor any of the banks would comment on any plans involving the power plants.
After an investor is selected, Egypt’s wealth fund could establish a joint venture with them to hold the investment. That will be followed by a power-purchasing accord that would let the JV sell the electricity the plants produce to the government. Offering a stake from the power plants on the Egyptian or an international stock exchange is also possible, Soliman said.
--With assistance from Emma Dong and Matthew Martin.
To contact the reporter on this story: Mirette Magdy in Cairo at mmagdy1@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Michael Gunn, Vernon Wessels
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