Italian Natural Gas Grid for Sale

Wall Street Journal - Europe

Enel SpA, Italy's biggest utility by revenue, will soon try to sell a controlling stake in its lucrative Italian natural-gas grid, a person familiar with the matter said.

During a Nov. 11 board meeting, Enel's board gave Chief Executive Fulvio Conti a mandate to announce an international auction for the sale of a majority stake in Enel Rete Gas SpA, which it currently owns nearly all of, the person said.

Enel, which also supplies electricity in Italy and other countries, wants to sell some of its assets to slash some of the debt it accumulated after a joint takeover of Spain's Endesa SA last year, in the world's biggest utility acquisition. Enel, whose debt stood at €51.4 billion ($67.2 billion) on Sept. 30, expects to raise some €1.2 billion through the sale, the person said.

Italy's gas regulators valued the Enel Rete Gas grid at €1.6 billion in Jan. 2008, when it set the grid's fees. Enel is Italy's second-largest distributor of natural gas after ENI SpA.

It is unclear who could emerge as a potential bidder. In recent years, Russian gas company OAO Gazprom has pushed to expand its presence in Italy, in particular by signing a deal with ENI to sell directly to Italy's lucrative natural gas market. However, the person familiar with the matter said Enel is likely to seek a nonindustrial buyer that it can form a partnership with.

A spokesman for Gazprom declined to comment.

F2i SGR, an Italian investment fund specializing in infrastructure, could be interested in the grid, because it is in line with the assets the fund typically invests in, an F2i spokesman said. The spokesman added that the fund had not been in talks with Enel about a potential bid, because the grid had not been formally placed on sale.

Enel has appointed Banca IMI SpA, the investment banking arm of Italy's largest bank Intesa Sanpaolo, and Morgan Stanley as financial advisers for the auction, the person familiar with the situation said.
—Liam Moloney contributed to this article.

Write to Stacy Meichtry at stacy.meichtry@wsj.com