February 20, 2019 / 5:51 PM / a month ago

Italy's Terna taps Santander to raise cash for Latam business - sources

MILAN/LONDON, Feb 20 (Reuters) - Italian power grid operator Terna has hired Spanish bank Santander to scout investors that could plough cash into its transmission businesses in Brazil, Peru and Uruguay, four sources familiar with the matter told Reuters.

Terna could raise 200 million to 300 million euros from the process, two of the sources said.

The process kicked off recently and aims to raise funds to help Terna strengthen its footprint in Latin America, the sources said.

Terna and Santander declined to comment.

Italy’s state-controlled power transmitter ranks as one of the world’s biggest power grid players with a market value of 10 billion euros ($11.4 billion).

But it heavily relies on the Italian market where it makes most of its money from returns set by the regulator to help it improve the country’s high voltage transmission grid.

As part of its diversification push, Terna is looking to non-regulated businesses and international developments where investments could command fatter returns, fuelling earnings and dividend payments.

Terna counts State Grid Corporation of China as its second-biggest shareholder, after state lender Cassa Depositi e Prestiti.

One of the sources described South America as a “good platform to boost growth”.

The Rome-based company has concessions to develop power transmission lines in Brazil, Uruguay and Peru where it has pledged to invest around 245 million euros to 2022.

It recently unveiled a new 158 km power line in Brazil to carry power produced from wind farms in the south of the country into the national grid.

With over 80 percent of electricity produced from green sources and wind production on the rise, Brazil is seen as one of the world’s top energy markets.

“Early days but there’s been a lot of interest in the Brazilian assets,” said another source familiar with the matter.

In its 2018-2022 business plan unveiled last year, Terna said it expected to generate an estimated 150 million euros in core earnings from international operations, primarily in Latin America. ($1 = 0.8800 euros) (Reporting by Stephen Jewkes and Pamela Barbaglia, additional reporting by Andres Gonzalez in Madrid Editing by Susan Fenton)

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