What does Engie and EDP have in common? Large funds

  • ECO News
  • 10 April 2018

BlackRock and Capital Group, who hold 4.95% and 4.36%, respectively, of Engie's capital, are also present in EDP's capital. Capital Group holds 12% of EDP.

The energy sector is on fire, with renewable energies as the “driver” of consolidation. There are several businesses that are changing the European sector scenario, so a possible investment from Engie in EDP is not a surprise. But is it just the attractiveness of EDP’s renewable energy business that is moving the French giant? There might be another explanation. The answer may come down to both companies’ shareholders.

EDP’s portfolio, with 73% of capacity installed in renewable energies (water, wind and solar), is the main reason for such interest, in a framework of a market that is increasingly interested in renewable energies, not in conventional energy production”, BiG Research states. “EDP also presents a significant geographical presence, with special highlight to Brazil and the United States of America”, the banking institution concludes, in statements to ECO.

EDP has a portfolio that makes it attractive to several players, but in the case of Engie we may also stand before a marriage of investors’ interests. Those who invest in the French giant also have a lot of money on the Portuguese listed company. And who are those investors? Large international investment funds.

Engie’s shareholder structure

Source: Reuters

Engie has the French State as its main shareholder, but further down the list of shareholders are BlackRock and Capital Group, which hold 4.95% and 4.36%, respectively, of the capital of the company headed by Isabelle Kocher. These funds are also present in EDP’s capital: the Capital Group is one of the main shareholders.

While the North American from BlackRock have 5% equity, the Capital Group holds 12%, with CNIC holding 4.98% and 23.27% being held by China Three Gorges. Both are North American, and, by definition, these funds always search for the best solutions to make the most of the money its investors’ trust them with.

EDP’s shareholder structure

EDP is a very generous with its shareholders, handing in yearly almost 700 million euros through dividends. But Engie’s purchase of the Portuguese electricity company could be even more profitable, creating high potential gains for those investors who, at the same time, would continue exposed to the French listed company and EDP’s renewable assets.

Meanwhile, this double bet from both funds could crash into China Three Gorges’ interests that have a buying approach, more than a selling approach. Sources from the market assure that the possibility of the Chinese from CTG will launch a takeover bid is real and effective.