MILAN: Italy's Enel has received binding bids for its stake in Slovakia's biggest power company as it presses ahead with plans to sell 5 billion euros ($5.6 billion) of assets to cut debt and fund growth.
Enel, Europe's second biggest utility for installed capacity, has put the sale of its 66 percent stake in Slovenske Elektrarne at the heart of its disposal plan, aimed at reducing a 39.5 billion euro debt pile.
But the deal has met vocal opposition from the Slovak government. Francesco Starace, who took over as CEO last May, said the bids by private players for Slovenske, which he said had an equity value of around 750 million euros, arrived on Thursday.
However, the sale process could be split in two phases, with part of the stake being sold to the Slovak state first and the rest to private investors at a later date. "It's in the best interest of all parties that Enel steps out partially but remains a shareholder (for the time being)," he told analysts.
The Slovak government, which holds 34 percent of Slovenske, has told Enel it wants to raise its stake to a majority.
Czech energy group EPH and a Hungarian consortium told Reuters they had filed bids while Finland's Fortum has previously expressed interest.
Enel said it would also be selling renewable energy assets in Portugal and upstream gas assets which together could raise some 1 billion euros.
"The gas assets are very valuable but they are no longer strategic," Starace said. Enel has gas fields in Italy, Algeria, Egypt and Cyprus.
LATAM REJIG
Enel, which controls Spanish utility Endesa, beat consensus on Friday with core earnings in the first three months of 4 billion euros as a strong performance by its Latin America business offset weak domestic power generation.
At 1108 GMT, Enel shares were up 3 percent while the European utility index was up 2.5 percent.
Enel, the biggest independent power player in South America, is reorganising its units there to make them more investor-friendly.
Starace said the timeframe for the rejig, which will create a holding for Chile and another for business in Argentina, Brazil, Columbia and Peru, would be 12-18 months.
Enel's earnings in Latin America jumped 33 percent in the first quarter offsetting the 8 percent fall in Italian power generation and the 17 percent drop in eastern Europe. Weak energy demand and a surge in green energy has hit domestic generation businesses at utilities across Europe, prompting groups like Germany's E.ON to shift focus to renewables and networks.
Enel is betting on emerging markets, green energy and digital power grids to help boost profits.
"Digital grids, where we are No. 1 in the world, are essential to trigger this revolution," Starace said of the advent of energy storage systems for homes and businesses, like those proposed by Tesla Motors.
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