(Adds background and quotes on the possible sale)
HELSINKI, March 19 Finnish utility Fortum's
chief executive said its electricity distribution
business was attracting interest from potential buyers, and
shrugged off concerns that a foreign buyer would represent a
risk to the country's power grid.
The state-controlled company has been assessing its
strategic options and sources said last week it has hired
Citigroup and Danske Bank to explore a 5
billion-euro ($6.5 billion) sale of the electricity distribution
business in Finland and Sweden.
"It is clearly seen that this is drawing interest, which is
not a surprise," Chief Executive Tapio Kuula told Reuters on
"The business as such is very predictable and moreover the
assets are located in stable geographic regions, which makes
this attractive to international investors."
The possible sale, due to be prepared in the course of 2013,
would follow the trend of large energy firms selling regulated
networks in order to cut debt and focus on power generation.
At Fortum, the distribution business has yielded a return on
net assets of about 8 percent. Last year it generated operating
profit of 328 million euros, with sales of around 1 billion
euros - some 17 percent of the group's turnover.
Kuula reiterated that Fortum might remain a minority owner
in the operations, while the company could also sell the Finnish
and Swedish assets separately.
Finnish government officials have said previously they would
prefer not to sell Fortum's domestic distribution assets - the
country's largest - to a foreign buyer. Kuula said such concerns
were not warranted.
"As a Finn, I wouldn't be worried as this business is
subject to licence and it is regulated, so the owner must fulfil
the criteria in any case," he said.
($1 = 0.7717 euros)
(Reporting By Jussi Rosendahl; Editing by Ritsuko Ando and Tom