FRANKFURT/ISTANBUL German utility E.ON (EONGn.DE) aims to more than double Enerjisa's share of Turkey's power generation capacity, expanding its presence in one of the world's fastest-growing energy markets.
Germany's biggest utility said on Tuesday that Enerjisa, in which it acquired a 50 percent stake on Monday, wanted at least 10 percent of the market by 2020, up from 4 percent now.
E.ON's move into Turkey followed an agreement in January to buy a 10 percent stake in Brazilian group MPX Energia MPXE3.SA.
"In Turkey we found exactly what we wanted - a stable market with an interesting growth perspective and a superb partner which is well established," chief executive Johannes Teyssen said, referring to Sabanci Holding (SAHOL.IS) which owns the other half of Enerjisa.
E.ON - hit by Germany's decision to end nuclear power production by 2022 - has been looking for growth in fast-growing markets to offset stagnating energy demand in western Europe.
As part of the Enerjisa deal - which saw E.ON swap assets with Austrian hydropower company Verbund (VERB.VI) - the German group will invest 150-200 million euros ($196-261 million) annually in Turkey until 2015.
Turkey's economy was the fastest growing in Europe last year, rising 8.5 percent. Total Turkish energy consumption rose 9.2 percent to 118.8 million tonnes of oil equivalent in 2011, the highest annual growth rate in Europe and Eurasia, according to BP's statistical review.
Turkey's annual power demand is around 210 terawatt-hours (TWh), and the government expects demand to rise at an annual rate of 6-9 percent from 2009-23.
E.ON, together with Sabanci, aims to have up to 8,000 megawatt (MW) capacity in Turkey by 2020, giving them at least 10 percent of market.
Enerjisa, which has 1,700 MW installed capacity, has a further 2,000 MW under construction and 1,500 MW under development.
"Enerjisa is well positioned and is currently the No.2 power producer in Turkey, one of the most dynamic energy markets worldwide," DZ Bank analyst Marc Nettelbeck said.
E.ON said the transaction - under which Verbund will receive its interest in eight hydropower plants in Germany plus other assets and a cash component of about 300 million euros ($392 million)- was expected to close in the first quarter of 2013.
E.ON shares were up 0.4 percent at 13.85 euros by 6:40 a.m. EDT.
(Additional reporting by Michael Shields in Vienna and Tom Kaeckenhoff in Duesseldorf; Editing by Louise Heavens)