* RTE weighing formal bid for 24 pct of Greek grid firm
* French operator will not overpay, yield is key factor
* EU power market review could ease takeover restrictions
* RTE ready to play role in EU power network consolidation
By Geert De Clercq, Bate Felix and Benjamin Mallet
PARIS, Oct 17 French grid operator RTE, a unit
of state-owned utility EDF, says it is considering a bid for
Greek grid operator ADMIE and would be ready to play a role in
consolidating Europe's power networks if EU regulations allow
RTE, China's State Grid and Italy's Terna have all
been shortlisted by Greek power utility PPC to submit
binding bids for a 24 percent stake in ADMIE by Oct. 21.
RTE Chief Executive Officer Francois Brottes told Reuters in
an interview on Monday RTE had been approved as a candidate
bidder but that it had not yet entered a formal bid because it
was waiting for additional information from the vendor.
RTE would not overpay for ADMIE or other acquisitions, he
"We have no intention to spend money in order to lose money
just in order to get our foot in the door. We need to earn a
profit," he said.
He added that even if international investments may not be
hugely profitable from the start, they need to meet minimal
Under Greece's bailout agreement struck in 2015, ADMIE owner
PPC, itself 51 percent state-owned, must either sell a minority
stake in ADMIE or fully privatise the grid by next year. A
preferred bidder has to be chosen by Oct. 31 and the deal is
expected to be concluded in the first three months of 2017.
EU GRID CONSOLIDATION
Unlike Terna, which is market leader in neighbouring Italy,
and State Grid Corporation of China (SGCC), which has built up a
Mediterranean network through minority investments in Portugal
grid operator REN and Terna shareholder CDP Reti, RTE
has no interests in the region.
But Greece is one of the few countries where RTE, eager to
play a role in the consolidation of EU grid operators, can bid
for a sector peer.
Under the level playing field provisions of EU energy
directives, RTE is not allowed to bid for independent grid
operators that have been unbundled from the utilities that used
to own them.
Like ADMIE, RTE is an "Independent Transmission Operator"
(ITO) - a grid operator owned by a vertically integrated
utility, but managed independently - and can only bid for stakes
in other grid operators with a similar legal status.
Since only a few countries in Eastern Europe have opted for
this status, RTE - Europe's largest grid operator with a network
of 105,000 km of high-voltage lines - has limited options to buy
stakes in foreign grid operators.
Brottes said the planned sale of a 49.9 percent stake in RTE
to state-owned bank Caisse des Depots would not change RTE's ITO
status, but said he hoped that EU grid regulation might change
in an upcoming European Commission review of the Third Energy
Package that regulates Europe's power markets.
"The rules governing transmission grid operators in Europe
could change with the Winter Package," he said.
Brottes said RTE was observing consolidation in European
grids, notably Belgian grid operator Elia and Dutch
grid operator Tennet's investments in German peers, as well as
the Chinese investments in Portugal and Italy.
"If there is consolidation in Europe, RTE cannot watch the
match from the stands like a spectator," he said, adding that
RTE would not act aggressively.
Brottes said that its shareholder EDF and
CDC were in exclusive talks until the end of November.
He said the indicative value of 8.45 billion euros for 100
percent of RTE agreed between the two parties in was fair.
Given its 2015 revenue of 4.6 billion euros, this puts RTE
on a price/sales ratio of just 1.8, compared to 5.3 for Spain's
Red Electrica, 4.4 for Terna and 2.6 for Britain's
"We are properly valued, maybe the others are overvalued,"
he said, adding that unlike many other grid operators, RTE had
public service duties, such as guaranteeing the same power price
nationwide and organising the power market.
He also said that RTE has no plans or need for a capital
increase, but would in the next five years spend about 10
percent of its 1.4-1.5 billion annual investments on digitising
(Editing by Ruth Pitchford)