September 10, 2019 / 9:43 AM / a month ago

Amprion looking at funding options as grid investments rise: sources

FRANKFURT (Reuters) - German high-voltage power transmission network Amprion, whose owners include RWE (RWEG.DE) and Munich Re (MUVGn.DE), is evaluating options to bring in fresh funds, two people familiar with the matter said.

Options include issuing hybrid bonds, debt or raising capital, the people said. Amprion is one of Germany’s four power transmission system operators, which also include TenneT IPO-TTH.AS, Elia’s (ELI.BR) 50Hertz and EnBW’s (EBKG.DE) TransnetBW.

Due to Germany’s exit from baseload energy sources — most notably nuclear and coal — and a steep rise in intermittent renewable capacity, network operators face huge investments over the next decades to make sure grids can manage the squeeze.

Germany’s no.1 grid operator, TenneT - owned by the Netherlands - is currently also in discussions on how to raise fresh capital for future investments.

Amprion, which operates Germany’s second-largest high voltage power transmission grid, plans to spend 9.34 billion euros ($10.26 billion) in the 2019-2028 period, up 38% from the 2018-2027 period.

One source said the group was in near-term need of about 2 billion euros, adding that one option was to bring in new investors.

“In general, our investments were and are fully financed. We are, of course, constantly evaluating different financing instruments and options at an early stage. But we are under no pressure at the moment,” a spokesman for Amprion said.

He added no decision regarding future financing measures had been taken, but that the company was generally in talks with a large number of market participants.

RWE owns 25.1% of Amprion, while the rest is held by M31 Beteiligungsgesellschaft mbH & Co Energie KG, whose investors include insurers Swiss Life (SLHN.S) and Talanx (TLXGn.DE) as well as MEA Munich Ergo, a unit of reinsurer Munich Re.

In late July Moody’s had changed its outlook on the “A3” rating it had to negative from stable, citing higher investment needs, lower equity returns for grid operators and falling cash flows.

“We have a stable group of shareholders which have shown their commitment in the past through their capital increase. We believe that such a measure can be repeated again in the future if there is demand for it,” the spokesman said.

RWE’s Chief Financial Officer Markus Krebber said in May that Amprion was a strategic investment and that RWE would remain a shareholder. In 2011 RWE sold a majority in Amprion in a deal that valued the business at 1.3 billion euros.

Editing by Michelle Martin

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