China could soon make its presence felt in the French power sector as its sovereign wealth fund said it had studied investments in both Areva, the state-owned nuclear group, and its energy equipment division.
The China Investment Corporation has paid a visit to Areva executives in recent weeks to seek out information on “the business and its performance”, according to one person close to the company.
CIC has also asked for information on Areva T&D, the transmission and distribution division that was put on the block this summer. The unit, valued at between €3bn ($4.3bn) and €4bn, is one of the world’s leading suppliers of high and medium voltage power equipment and the CIC could be interested in taking a sizeable stake alongside another investor.
CIC’s interest in Areva, disclosed in the French daily Les Échos on Friday, follows the government’s decision earlier this year to sell at least 15 per cent of the group’s equity to industrial or strategic partners.
Paris has been talking to sovereign wealth funds from the Middle East and Asia about selling stakes under 5 per cent in Areva. The move, first reported in the Financial Times, is an effort by Paris to cement the group’s position in key emerging nuclear markets.
Areva’s Japanese partner, Mitsubishi Heavy Industries, is also widely expected to take a stake.
However, a final decision on the opening of Areva’s share capital to outsiders is unlikely to be taken before the question of the T&D sale is resolved. Areva has been forced to put the business up for sale by its government shareholder in an effort to raise the €12bn it needs for future expansion and reduce the pressure for a capital increase.
Some 30 potential bidders have asked for the sale documents, including a second Chinese group, the low-voltage equipment maker, Chint Group of Wenzhou.
If Chint decides to bid by the September 18 deadline, it will find itself again in a battle with the French group Schneider Electric, which has joined Alstom of France to bid. In April, Schneider was ordered to pay Chint $23m to settle a patent lawsuit – at the time the largest recorded settlement in an intellectual property case in China.
Toshiba of Japan has also requested the sales memorandum and said that it is “watching with interest because the sale would change the dynamics of the industry”.
Toshiba would struggle to finance a bid. Despite a Y500bn ($5.37bn) capital raising in June, Toshiba’s equity amounts to only 20 per cent of total assets, its credit rating from Standard & Poor’s is BBB, and it must fund investment in both its semiconductor and nuclear power plant divisions.
Areva may also be reluctant to sell to one of its main rivals. Other interested parties include GE of the US and financial groups, including Axa Private Equity.