CGE has a new owner: china State Grid agrees to purchase the largest Chilean electricity distributor

This morning, the Spanish company Naturgy announced the sale of the 96.04% it holds in the Chilean electricity distributor CGE -the largest by number of clients- at 2,570 million euros, equivalent to some US $ 3,000 million, in what constitutes the largest operation of the year in the country.

Through a communication sent to the National Commission for the Securities Market of Spain (CNMV), the Spanish group – previously known as Gas Natural Fenosa – reported that the Chinese company State Grid International Development Limited (SGID) agreed to pay € 2,570m, “Set in euros and payable in cash at the close of the transaction”.

Santander CIB was a financial advisor to the Chinese firm.

State network is currently the controller of Chilquinta, which it acquired in October 2019 for more than US $ 2 billion from the US group Sempra Energy. Given that, the operation announced today must first overcome the barrier of the National Economic Prosecutor’s Office (FNE), given that they are two companies in the same category.

Specifically, the parties expect the operation to be completed by February 2021, once the regulatory conditions are met. Naturgy decided to leave the presentation of Capital Markets Day for that date, given the relevance of this operation.

“The Chinese energy group, based in Beijing, is the world’s largest energy services corporation and has extensive experience in the construction and operation of electricity transmission and distribution networks, explains the firm.

“The company’s electricity network covers 26 provinces in China, which represents more than 88% of the country’s territory and serves a population of more than 1,100 million. The company ranked fifth on the Fortune Global 500 in 2019, ”it adds.

The arrival of Naturgy to Chile

Naturgy, then called Gas Natural Fenosa, acquired CGE in 2014, through a takeover bid. The Chilean electricity distributor was then controlled by the Marín, Pérez Cruz and Hornauer families and included a stake in Gasco, Metrogas and in the LNG Quintero liquefied natural gas terminal, among other activities.

those who were part of the group. The disbursement made by the Hispanic firm reached US $ 3,060 million.

“The agreement reached today allows us to move forward decisively in our transformation and represents an important first step in our asset rotation objectives that will allow us to be more ambitious in our investment and growth plans. We want to be a leading company in the energy transition at a global level and this operation provides us with strategic flexibility and greater financial capacity to grow ”, explained the president of Naturgy, Francisco Reynés, regarding the operation.

Naturgy expects that this operation will allow a reduction of the consolidated net debt of approximately 4,000 million euros, “providing the company with an important financial capacity to address growth opportunities related to the energy transition, always ensuring the creation of value”, it was added .

A century of history

CGE is the largest electricity distribution company in Chile by number of clients, supplying electricity to 45% of households in the country. Founded in 1905, it is also the main power transmitter in the zonal transmission segment. It is present in 14 regions of Chile.

Between 2016 and 2019, the national electricity distributor completed a major corporate restructuring and simplification. Its total workforce reaches 1,463 employees, according to figures as of September 2020.