Posted By Global Banking and Finance Review
Posted on December 12, 2024
By Emma-Victoria Farr, Andres Gonzalez and Christoph Steitz
FRANKFURT/LONDON (Reuters) - Munich Re's German asset management arm MEAG is considering selling its stake in Amprion, which operates 11,000 kilometres of high-voltage power grids in Germany, three sources familiar with the matter told Reuters.
Alternatively, MEAG could look for a co-investor to raise capital to cover Amprion's capital expenditure requirements, a situation grid owners face regularly, the people added.
High investment needs are causing a rethink among network owners and Germany's largest utility RWE said earlier this year it would look into selling its 25.1% Amprion stake.
MEAG declined to comment.
Higher interest rates have made regulated power grids a more challenging investment, effectively cutting returns on them.
Dutch-owned power grid group TenneT said last week it will separate its businesses in the Netherlands and Germany in order to facilitate growth and a potential divestment of its German arm, either via a sale or a listing.
Germany's federal network agency estimates that upgrading the country's power distribution and transmission networks could cost 450 billion euros ($473 billion) by 2045.
Amprion alone plans to invest 27.5 billion euros over the next five years.
MEAG owns an indirect stake of around 13.9% in Amprion through a holding company whose investors include insurance companies Swiss Life and Talanx.
All three sources spoke on condition of anonymity because the matter is private.
Analysts estimate RWE's holding to be worth 1.6 billion euros, implying a value of 886 million euros for MEAG's.
($1 = 0.9509 euros)
(Reporting by Emma-Victoria Farr, Andres Gonzalez and Christoph Steitz; Additional reporting by Alexander Huebner; Editing by Anousha Sakoui and Alexander Smith)