Eni in talks with Ares fund over Plenitude stake sale, valuing unit at $13 billion

By Francesca Landini

MILAN (Reuters) -Italian energy group Eni said it had entered exclusive talks with investment firm Ares Alternative Credit Management to sell a 20% stake in its renewable and retail business Plenitude.

The deal is part of Eni's efforts to develop greener businesses and signals the growing interest of Los Angeles-based Ares , which had $546 billion in assets under management at the end of March, for the Italian market.

Negotiations are based on an equity value of Plenitude of between 9.8 billion and 10.2 billion euros, which rises to more than 12 billion euros ($13 billion) when including debt, Eni said in a statement on Thursday.

The deal falls under Eni's 'satellite' strategy, aiming to develop specialised units dedicated to low-carbon businesses or upstream projects that can attract investments from financial partners.

By selling minority stakes in its units, Eni can fund capital spending in low-carbon businesses while preserving its capacity to invest in oil and gas activities, Chief Transition and Financial Officer Francesco Gattei recently said.

"The agreement follows a thorough selection process involving several prominent international players who expressed strong interest in the company, further confirming the great appeal of its business model and its growth prospects," Eni said.

Ares, a global leader in credit, which at the end of March accounted for $359 billion of its assets, on Wednesday said it was opening an office in Milan.

Tyrone Cooney, head of France and southern Europe for direct lending, told Reuters last year Italy was "the new frontier" for private credit funds.

Alternative credit is a form of asset-based finance, meaning lending secured by a pool of assets.

Mediobanca is a financial adviser to Eni. UniCredit and Deutsche Bank are advising Ares.

Under the satellite strategy, Switzerland's Energy Infrastructure Partners (EIP) has previously bought 10% of Plenitude in two transactions. The latest one, in March, valued Plenitude above 10 billion euros, including debt.

Earlier this year U.S. investment fund KKR acquired 30% of Eni's biofuel unit Enilive.

The state-controlled group is in preliminary talks with a handful of players interested in its budding carbon capture and storage business (CCS), sources told Reuters.

Eni's CCS projects in Italy and abroad will be wrapped up in a new unit by the end of this year, the group said.

The group is also negotiating with Malaysia's state energy firm Petronas to form a joint venture that will oversee upstream assets in Indonesia and Malaysia.

($1 = 0.8939 euros)

(Additional reporting by Valentina Za; Editing by Louise Heavens)