* China Three Gorges to invest about 1 bln euros by year-end
* EDP says cooperation good with its Chinese shareholder
(Adds more Mexia comments)
BOLOGNA, Italy, June 4 China Three Gorges, the
largest single shareholder of Portuguese utility Energias de
Portugal (EDP), is ready to make a major investment
outside Portugal in the coming days, EDP's chief executive said
EDP CEO Antonio Mexia said the investment was part of an
agreement with China Three Gorges for the Chinese utility to
invest 2 billion euros ($2.6 billion) in EDP's wind power farms
China Three Gorges' acquisition of a 49 percent stake in the
Portuguese unit of EDP's wind energy arm EDP Renovaveis (EDPR)
for 359 million euros in December 2012 was the first
operation under that agreement.
"For the next investment, we will diversify geographies,"
Mexia told Reuters on the sidelines of the Eurelectric utilities
conference, adding that China Three Gorges and EDP were looking
at South America and Europe.
The investment agreement was part of the Chinese utility's
acquisition of a 21 percent stake in EDP for 2.7 billion euros
in December 2011. It gives China Three Gorges access to EDP's
global wind power assets and allows EDP to reduce its debt.
Mexia said China Three Gorges could spend up to one billion
euros before the end of 2013, including the first 359 million
euro transaction in December 2012.
"We want to show the market that the partnership is working.
The first investment was in Portugal, the rest will probably be
outside," he said.
Mexia said a year into their alliance, there were no
communication problems between EDP and its Chinese shareholder
and that the two firms had similar investment goals.
"We share a vision that renewables - water, wind and solar -
will play a key role," Mexia said, adding that the two also have
the same focus on new markets in South America, notably Brazil.
After 2015, once EDP has reduced its gearing from four times
net debt over core earnings (earnings before interest, tax,
depreciation and amortisation) to three times, the company would
also start looking at opportunities in Africa, he said.
China's investments in Portugal are closely watched by all
leading utility players in Europe as they are the first Chinese
investment in this sector.
In February 2012, just months after the China Three Gorges
investment in EDP, State Grid Corporation of China (SGCC) bought
a 25 percent stake in Portugal's power grid operator REN.
On Monday, an SGCC official told Reuters China is ready to
invest further in European utilities if it finds the right
opportunity and is happy about its first investments in
SGCC - China's dominant power grid distributor - said in
November it planned to expand its overseas assets to $30
billion-$50 billion by 2020 from the current $8 billion.
Mexia said SGCC would invest mainly in grids, not in the
power generation end of the utilities business, and was mainly
interested in acquiring the steady cash flows that the regulated
grid business provides.
He said that in Europe's liberalised energy markets, where
utilities are no longer allowed to own the power networks, China
Grid could provide much-needed finance.
($1 = 0.7675 euros)
(Reporting by Geert De Clercq; Editing by Mark Potter)