French Engie Eyes $9.5bn Divestments
French energy giant Engie is mulling a doubling of its disposal programme, to €8 ($9.55)bn, it said July 31, to fund an accelerated growth in infrastructure and renewable energy. It did not say which assets were on the slate but they will be from the client services sector, minority stakes and other non-core activities.
It has raised its renewable target from 3 GW to 4 GW over the medium term with more renewable projects on its balance sheet. It said it will also spend more on biogas and hydrogen in Europe.
"This strategic move will strengthen the group’s position as a key player in low-carbon energy and in the decarbonisation of energy systems," it said.
Engie will also further accelerate its growth in decentralised infrastructure assets such as urban district heating and cooling networks and on-site power generation. Engie said it will "also seek to rebalance its exposure to French and international gas and electricity networks."
Decentralised infrastructure assets such as district heating and cooling networks, on-site low carbon power generation and related services, mostly benefit from long-term contracts and help clients achieve their energy transition targets.
However, the board decided to conduct a strategic review of the other activities representing some two thirds of Client Solutions revenues. These activities will be assessed in light of their coherence with the strategic priorities of the group. "All options will be considered with a view to maximising their value and reinforcing their leadership position, and to seize future growth opportunities through a coherent perimeter and adapted organisation," it said.
"Overall this could lead Engie to potentially more than double its previously communicated asset divestment programme of around €4bn over the medium-term. The implementation of these strategic orientations will be presented in the first half of 2021," it said.
Engie chairman Jean-Pierre Clamadieu said strengthening Engie's capacity to play a key role in the energy transition depended on clearer organisational and strategic priorities, including from a geographical standpoint. "This is the essence of the direction that we are presenting today and that will constitute the roadmap for the new CEO, to be announced soon. The appointed employee representatives will be regularly informed and consulted on projects that may result from the strategic review of Client Solutions' activities and on potential divestment projects before any decision is made.”
Earlier this month, UK utility Centrica announced the £3.625 ($4.8)bn sale of Direct Energy, its North American business, citing balance sheet requirements.