CIC Said to Review Options for Engie Exploration Stake Amid Sale

(Bloomberg) -- Sovereign fund China Investment Corp. is reviewing options for its 30 percent stake in Engie SA’s exploration business as the French utility pushes ahead with a sale, according to people familiar with the matter.

The $814 billion wealth fund has reached out to banks to seek pitches for a strategic review of its stake in the Engie business, which has assets spanning Europe and Africa, the people said. CIC, based in Beijing, is unlikely to sell its holding and is leaning toward increasing it, the people said, asking not to be identified because the information is private. The unit could fetch about $4 billion, people familiar with the talks said in July.

Engie is planning to sell its upstream operations globally, including businesses in the U.K., Norway, Algeria, Egypt, Germany and Asia, people familiar with the matter said in July. The company has sent out marketing materials to potential bidders for the business, one person said this week. The company hasn’t yet received any formal bids, according to the person.

CIC signed a memorandum of understanding with Engie in June 2015 agreeing to “reinforce” their investment cooperation, particularly in areas including renewable power, new technologies and energy efficiency. The sovereign fund hasn’t made any final decision about what to do with its stake in the exploration business, the people said. 

A spokeswoman for Engie declined to comment. A Hong Kong-based representative for CIC didn’t answer phone calls and an e-mail seeking comment.

Engie plans to offload as much as 15 billion euros ($16.5 billion) in assets by 2018. CIC bought a 30 percent stake in the French company’s exploration and production business for 2.3 billion euros in 2011.

CIC’s overseas investments posted a 3 percent loss last year, according to an annual report posted on its website. Energy investments accounted for 5 percent of its global portfolio in 2015, while financial holdings accounted for 22 percent. Among its deals in the energy sector last year was the purchase of $50 million in Paladin Energy Ltd. convertible bonds.

--With assistance from Francois de Beaupuy To contact the reporters on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net, Dinesh Nair in London at dnair5@bloomberg.net. To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Aaron Kirchfeld at akirchfeld@bloomberg.net, Amy Thomson