Naturgy to sell stake in Chilean utility CGE to China’s SGI for €2.5bn

Spanish energy company Naturgy has signed a deal to divest its 96.04% stake in Chilean electricity distribution company Compania General de Electricidad (CGE) for Chinese state company State Grid International Development Limited (SGI) for €2.57 billion.

Established in 1905, Compania General de Electricidad supplies power to 45% of households in Chile. The company is also said to be the main energy transmitter in the zonal transmission segment and has a presence across 14 regions of Chile.

Compania General de Electricidad, between 2016 and 2019, executed a major corporate restructuring and simplification. Its total workforce, as of September 2020, is 1,463 employees.

Francisco Reynés – president of Naturgy said: “The agreement reached today allows us to move decisively forward 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.”

Following the completion of the deal, Naturgy expects to generate capital gains of nearly €400 million, before taxes.

Additionally, the deal will cut down Naturgy’s net debt by nearly €4 billion to €10.8 billion following the deconsolidation of the debt and the pre-tax cash income of Compania General de Electricidad obtained from the sale.

Naturgy intends to use the proceeds from the sale for investing in assets, particularly in renewables and electricity grids.

The deal, which is subject to regulatory approvals and authorizations from Chilean competition supervisory bodies, is expected to be closed before the end of February 2021.