May 29, 2012 / 8:53 AM / 6 years ago

UPDATE 2-China's State Grid to buy Brazil assets from Spain's ACS

By Charlie Zhu and Michelle Chen

HONG KONG, May 29 (Reuters) - State Grid Corp of China has agreed to buy electricity transmission assets in Brazil from Spanish builder Actividades de Construcción y Servicios SA (ACS) for $531 million and assume debt of $411 million, the latest in a series of overseas acquisitions by Chinese power companies.

State Grid Corp’s wholly-owned subsidiary State Grid International Development Ltd will take over seven high-voltage electricity transmission assets in Brazil from ACS, according to a statement via Bank of America Merrill Lynch, which acted as exclusive financial advisor to State Grid on the deal.

ACS has been seeking to cut debts by selling non-strategic assets. The company had been looking for buyers of 750 megawatts of renewable energy assets, power transmission assets in Brazil, desalination plants and various motorway assets to raise an estimated 3 billion euros this year.

China’s cashed up state power groups have been scooping up bargains in the past few years, with dominant power distributor State Grid - the world’s largest state utility - establishing a presence in the Philippines, Brazil and Portugal.

Sinopec Group, state parent of Asia’s largest refiner Sinopec Corp , has also made multi-billion dollar oil asset acquisitions from European companies in Brazil in the past year.

Sinopec last year paid $3.5 billion for an offshore oil stake in Brazil from Portugal’s state-controlled Galp, which wanted to raise cash as the euro zone debt crisis crushes Portugal’s finances.

State Grid’s latest transaction in Brazil will be its second investment in the fast-growing Latin American economy and fourth major investment outside of China, the statement said.

State Grid signed a deal early this year to buy a 25 percent stake in Portuguese power grid operator Redes Energeticas Nacionais SGPS SA (REN) for about $508 million. In December 2010, it bought seven Brazilian power transmission concessions with investments totalling nearly $1 billion.

In January 2009, a consortium led by State Grid took over operation of the Philippine power grid after winning an auction for a 25-year operating licence for $3.95 billion.

With a total length of approximately 2,792 km, the seven electricity transmission assets bought by State Grid from ACS span eight states in Brazil, the statement said.

A majority of the assets to be acquired are currently in operation, with the remainder expected to begin commercial operation by the end of this year.

ACS was advised by Mediobanca on the transaction, the statement said.

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