PARIS (Reuters) - French state-controlled utility EDF's (PA:EDF) plans to sell almost 50 percent of its RTE unit would value the operator of Europe's biggest high-voltage electricity transmission grid at more than 5.2 billion euros (4.30 billion pound), sources said on Thursday.
Heavily indebted EDF wants to sell off non-core assets in order to invest tens of billions of euros in its nuclear power business over the next decade, including in the UK nuclear reactor project at Hinkley Point in southwest England.
New private investors will indirectly buy a stake in RTE through a holding company majority-owned by French state companies such as Caisse des Depots (CDC), EDF's merger and acquisitions chief Aymeric Ducrocq told EDF unions according to a document obtained by Reuters.
Under a 2004 law, RTE's capital must be held by EDF or other public entities, which means EDF can only sell to state-owned investors such as CDC.
According to the document, RTE's market value will probably be higher than its 5.2 billion euro ($5.8 billion) book value.
"If that's the case, the 51 percent of RTE's capital still owned by EDF will see its value rise, which will allow EDF to increase its fund earmarked for the dismantling of nuclear plants," the document says.
Another source close to the process said RTE could be valued at about 6 billion euros.
RTE's payout ratio could also be raised to 80 percent from 60 percent of its profits in the coming years to make RTE more attractive to investors, the document says.
While EDF is keen to press ahead with the sale as they think there would be a lot of appetite from infrastructure funds, the government would prefer to first take CDC on board as an investor as a quick way to raise cash while avoiding confrontations with unions, the source said.
A formal sale process that would see a foreign investor buy a stake would be launched after the 2017 presidential elections. The parties are expected to decide on the issue by the end of July.
EDF has picked Messier Maris and Associates and Goldman Sachs (NYSE:GS) as advisers, two sources said, confirming an earlier report by Le Figaro newspaper.
EDF declined to comment.