China Three Gorges Mulls $4 Billion Stake Sale in Overseas Unit

China Three Gorges Corp. is exploring selling a stake worth as much as $4 billion in the state-owned power company’s overseas asset portfolio, according to people familiar with the matter.

The power giant has approached sovereign funds including Singapore’s GIC Pte and China Investment Corp. about potentially acquiring a minority interest representing between 10% and 20% of China Three Gorges’ international assets, said the people, who asked not to be identified because the matter is private.

The move toward a stake sale follows the reorganization of the company’s overseas assets into a separate unit that Bloomberg News reported in December. China Three Gorges has been working with advisers on setting up an entity to hold the international assets and bringing in strategic investors, the people have said.

The overseas portfolio as a whole could be valued at as much as $20 billion, the people said. The company might consider listing the unit or some of the assets at a later stage, they said.

The size of the stake could still change depending on the assets that are ultimately included in the deal, the people said. Considerations are still ongoing and no final decision has been made, they said.

A minority stake sale would help the company both reduce debt and respond to the Chinese government’s urging state-owned companies to implement mixed-ownership reform, a policy meant to increase their efficiency and competitiveness.

Talks are progressing slowly due to factors including the impact of severe flooding in the southern part of the country, which has seen more than 2 million people along the Yangtze River evacuated, and ongoing challenges from the coronavirus pandemic, the people said.

Representatives for CIC and GIC did not immediately comment on the matter. A representative for China Three Gorges did not respond to calls and emails seeking comment.

China Three Gorges has been snapping up foreign assets in the past decade as Beijing encourages investment in the global power industry. The company has purchased almost $14 billion of assets from Europe to Latin America in the past decade, according to data compiled by Bloomberg.

The state-backed company is emerging as the leading bidder for Spanish solar park assets owned by X-Elio Energy SL, in what could become one of the few Chinese acquisitions in Europe this year, Bloomberg News reported this month.

©2020 Bloomberg L.P.

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