UPDATE 1-Fortum near sale of Finnish grid for more than 2 bln euros -sources

Wed Dec 11, 2013 11:04am EST

By Sven Nordenstam

STOCKHOLM Dec 11 (Reuters) - Finnish utility Fortum is in exclusive talks to sell its power grid in Finland for more than 2 billion euros ($2.75 billion) to a consortium led by the First State and Borealis infrastructure funds, two people familiar with the matter said.

One of the sources, who declined to be identified because the process is not public, said a sale could be announced in the coming days.

Macquarie European Infrastructure Funds and Cheung Kong Infrastructure (CKI), an investment entity controlled by Hong Kong Billionaire Li Ka-Shing, also submitted final bids, the people said.

Fortum and First State declined to comment. Borealis, Macquarie and CKI did not immediately respond to a request for comment.

The state-controlled utility launched a sale of the grid in September, inviting first-round bids from prospective buyers in mid-October, according to sources.

Fortum is the largest electricity distribution operator in the Nordic region and its distribution business contributed to 15 percent of group sales in 2012.

European energy firms are off-loading networks to cut debt and focusing on power generation and renewable energy as EU directives require them to relinquish control over grids.

Infrastructure assets are attractive to investors looking for steady and low-risk returns, such as pension funds.

Borealis Infrastructure is the infrastructure investment arm of Canadian pension fund OMERS which manages over $60 billion of assets. First State Investments is an asset management business owned by the Commonwealth Bank of Australia and manages more than $160 billion.

Sources told Reuters in March Fortum had hired Citigroup and Danske Bank to explore a sale of its electricity distribution business in Sweden and Finland, and that several infrastructure funds were considering bidding.