EDP Attracts Host of Suitors for Clean-Energy Prize With a Catch

(Bloomberg) -- EDP-Energias de Portugal SA’s 7.5 billion-euro ($8.5 billion) renewables unit, which spans from California to Poland to Brazil, is currently among the most coveted assets by utilities and private investors alike. But buying the sprawling clean-energy portfolio won’t be easy.

First, there’s the competition. Blackstone Group LP’s infrastructure fund, which is anchored by Saudi Arabia’s Public Investment Fund, is keen to buy part or all of EDP Renovaveis SA, in particular the firm’s U.S. portfolio, according to people with knowledge of the matter. The firm held preliminary discussions last year, they said.

There’s also ongoing interest from other companies in the energy industry, the people said, asking not to be identified because the deliberations are private. Blackstone Infrastructure Partners could also team up with the utilities, they said. Utilities including France’s Engie SA were among suitors that considered bids for the unit last June, people familiar with the matter said at the time. EDP Energias owns 83 percent of publicly traded EDPR.

The second catch: any deal is going to hinge on the bigger transaction -- China Three Gorges Corp.’s efforts to buy EDP Energias -- going through. While the Chinese would prefer to keep the entire clean-energy business, they will likely have to sell U.S. assets to win regulatory approval, the people said. But the deal appears to be in limbo.

China Three Gorges’s 9.1 billion-euro bid to raise its 23 percent stake in the Portuguese utility has been opposed by activist investor Elliott Management Corp. and the deal is still subject to several regulatory approvals, including key sign offs from the European Union and the Committee on Foreign Investment in the U.S., or CFIUS. Three Gorges said in the offer announcement on May 11 that it can’t rule out accepting some “mitigation measures” from the U.S. regulator.

Read more about Elliott’s role in the deal here.

A representative for EDP Energias said that reports of Blackstone’s interest were speculation and that the renewables operations are “completely core” to its business. The firm said on Tuesday that clean energy will represent three-quarters of its planned investments through 2022 as the company adds capacity in the U.S. and other markets.

Representatives for Blackstone and China Three Gorges declined to comment.

The interest in renewable energy from both utilities and private investors comes as wind and solar have evolved into lower-cost alternatives. EDPR’s U.S. portfolio features stakes in solar and wind farms that have a capacity of more than 5,000 megawatts, according to its latest earnings report.

--With assistance from Joao Lima and Aaron Kirchfeld.

To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Dinesh Nair in London at dnair5@bloomberg.net;Kiel Porter in New York at kporter17@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, ;Dinesh Nair at dnair5@bloomberg.net, Amy Thomson, Joao Lima

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