March 13, 2013 / 1:40 PM / in 6 years

UPDATE 2-TenneT IPO being considered to raise 500 mln euros

* Proceeds from an IPO would go to TenneT, not state

* To invest 13 bln euros in Dutch, German projects by 2023

* In talks with investors to fund offshore projects in Germany (Adds detail about projects, bonds)

By Ivana Sekularac

AMSTERDAM, March 13 (Reuters) - The Netherlands is considering the sale of part of power grid operator TenneT in an initial public offering to raise 500 million euros ($650 million) for investments in the domestic grid, the head of the firm said.

TenneT Chief Executive Mel Kroon said on Wednesday in an interview the company would need funds in 2014 and 2015 to upgrade the grid in the north of the country and connect wind farms.

Approval from the Finance Ministry is needed for the sale of a stake to go ahead.

“Around the summer it is expected that the minister will indicate whether or not to proceed with the minority sale of TenneT,” Kroon said.

“If he decides to do that, then the next question is in which way it can be done.”

Over the next decade, TenneT plans to invest 5 billion euros in several power projects in the Netherlands and another 8 billion euros in Germany, where it operates a high voltage grid. Funding arrangements are completed or underway for German projects.

TenneT wants to invest in 300 or so projects in the Netherlands, including linking power production capacity in the port of Rotterdam to the grid.

It is looking at ways to secure funding for Dutch projects, including bond issues and equity sales, given that state financing is tight.

Any proceeds from an IPO would preferably go to TenneT, Kroon said, reducing the burden on the state.

The Netherlands has pushed through several rounds of budget cuts and austerity measures in an attempt to meet European Union budget deficit targets.

Its auction of fourth generation (4G) wireless frequencies in December raised 3.8 billion euros, but it has not scheduled any privatisations of state assets so far.

TenneT raised 1 billion euros in bond sales in 2011 and subsequently received 600 million euros in two cash injections from the Dutch government.

In Germany TenneT bought E.ON’s German high-voltage grid in 2009 and now plans to upgrade the grid to support expansion of renewables in a shift away from nuclear power.

In January Japan’s Mitsubishi Corp agreed to invest 576 million euros in TenneT’s four German cables to connect offshore wind farms to the mainland in exchange for a minority stake in those projects.

“Talks are currently being held with other interested investors for the financing of other offshore projects in Germany,” TenneT said in a statement on Wednesday. ($1 = 0.7680 euros) (Editing by Sara Webb and Jane Baird)

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