Germany blocks 50Hertz acquisition by China

Aug 6, 2018
Companies
Posted by Patrick Haddad

German state-run bank KfW has blocked State Grid Corporation of China (SGCC) from buying a 20% stake in 50Hertz.

SGCC had been looking to acquire the stake in the German transmission system operator before being thwarted by a last minute intervention by the German Federal Government.

Belgian group Elia made use of their right of first refusal for the 20% stake, which they then passed on to KfW. Prior to that, the share was help by the Australian infrastructure fund IFM.

In a joint press statement, the Federal Ministry of Economics and the Federal Ministry of Finance emphasized on Friday morning that KfW’s entry into 50Hertz should only be a temporary solution. “The Federal Government has a high security interest in the protection of critical energy infrastructures for security reasons,” it said in the message.

In order to maintain a reliable energy supply, it was decided that KfW, on behalf of the Federal Government, would acquire the 20% stake in 50Hertz “in the context of a bridge solution,” that is, the shares are to be resold in the future, ” it said the the joint press statement.

Boris Schucht, CEO of 50Hertz, welcomed the decision. “The entry of KfW as a minority shareholder in the 50Hertz holding company Eurogrid shows just how vital the transmission grid is as part of the critical infrastructure of our country.”

SGCC had already been blocked from buying another 20% stake earlier in the year, when IFM set out to sell their 40% share, prompting Elia ,who then held 60%, to buy the first 20%.

The Chinese utility has yet to comment on the move, however Ding Yifan, deputy director of China Development Research Center – a think tank directly under the direction of the State Council – felt that the German government is “too sensitive” to Chinese investment. “With 20 percent, State Grid would not even have had a controlling stake,” he says, pointing out that Elia is also a foreign company.

Source: Handelsblatt

Photo (for illustrative purposes): SGCC Building Beijing/Ermell/Wikimedia/ CC BY-SA 4.0

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