State Grid

The State Grid of China is pursuing the takeover of Brazilian electric company CPFL Energia SA, a deal which could be China’s largest investment in the country.[quote] According to Market Watch, China’s primary power grid operator is ‘wooing’ shareholders of CPFL Energia SA and a listed subsidiary according to sources close to the matter.

The State Grid expects to secure stakes in the $13 billion deal from large holders this month, prior to making a full offer to the rest.

A release states that “the $13 billion deal, the value of which includes the assumption of CPFL’s 18.3 billion reias ($5.8 billion) of debt, could bring a fresh dose of foreign capital to Brazil, which is slogging through one of its deepest recessions ever.”

It adds that the highly profitable and fluid State Grid has been deploying more funds overseas as China’s economic engine slows. Power demand in the first half of 2016 was up just 2.7% from a year earlier.

Two years ago, in 2014, State Grid bought a 35% stake in Italy’s CDP RETI Srl for $2.8 billion, and a year earlier it spent $3.7 billion for a stake in Australia’s SP AusNet Ltd and its units.

In a previous deal, the Chinese utility company spent $1 billion in 2010 for seven small power-transmission companies in the southeast of Brazil. State Grid’s global assets totaled more than $450 billion at the end of 2015.

China ‘green’ cities

In other news, China’s cities will require US$1 trillion (6.6 trillion yuan) in green financing to reach its pollution-reduction targets – this according to a new report commissioned by the Green Finance Committee of China Society.

The report notes that Chinese financial markets will need to cover a staggering 90% of investment funding for clean transportation, energy-efficient buildings and renewable power through 2020. [China bids to boost renewable energy market]

The research conducted focuses around how green loans, bonds, industry funds, carbon funds and government policies could be leveraged into private investment into infrastructure that promote sustainability.

The report says: “Public funding should play a leveraging role and facilitate the entry of a large amount of private funding in the low-carbon development of Chinese cities.

“The financial sector should establish a system to differentiate potential projects based on their environmental benefits, so that green finance can effectively direct funding to low-carbon urbanization.”