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China: Chinese investment in Portugal in waste and insurance sectors in Portugal


The waste and insurance sectors are expected to be the next “targets” for Chinese investment in Portugal, a country that is calling on investors from China to look into the privatisations underway.

Chinese group Beijing Enterprises Water is, according to the Portuguese press, studying the privatisation of Portuguese company Empresa Geral de Fomento (EGF), a subsidiary of water group Águas de Portugal for the solid urban waste sector.

According to Diário Económico the Chinese company is planning to expand its increase potential outside the Chinese market.

For the water company from the Chinese capital, which is the leader of the water treatment sector in China, this transaction will boost its presence in the Portuguese market next it acquired Veolia Water Portugal, for 95 million euros in March from French group Veolia.

With this operation, the Beijing Enterprises Water Group became responsible for supplying water in four areas (Mafra, Ourém, Paredes and Valongo) and for waste water treatment in three areas of the Algarve, Portugal’s southernmost region.

Next the acquisition, the chief executive of Beijing Enterprises Water, Li Haifeng, said that the group planned to focus on mature and stable markets and was looking into how the Portuguese company could contribute to improving financial efficiency, acquisition of goods and services and other areas.

In the race to buy Empresa Geral de Fomento (EGF) the Chinese company is expected to be up against Brazilian group Odebrecht, according to Diário Económico.

The Portuguese government plans to publish the tender document by mid December and to conclude the sale in the initial quarter of 2014. The privatisation model is expected to be a block sale in order to get the biggest all from the transaction.

Preliminary valuations of EGF’s 11 multi-municipal systems point to a figure of between 140 and 170 million euros, according to Roland Berger.

Next large investments by national Chinese companies in the Portuguese energy sector (EDP and REN), the new investments include solar energy, inclunding water and sanitation, with the Hanergy Solar group announcing an initial agreement to acquire solar power parks in Portugal, with total capacity of 2.2 megawatts.

In the two major operations so far, China Three Gorges paid around US$2.7 billion for 21.35 % of EDP, thus becoming the Portuguese power company’s major shareholder. An additional large Chinese national company, China National Grid Corp, acquired 25 % of Portuguese power grid company Redes Energéticas Nacionais (REN) for 287.15 million euros.

As well underway is the sale of Portugal’s major insurer, Caixa Seguros, controlled by national banking group Caixa Geral de Depósitos, and in which Chinese group Fosun has shown interest.

The initial deadline for handing in proposals was 11 November, but Fosun has requested additional time to put its presentation together to buy Caixa Seguros, according to Diário Económico.

For this potential acquisition, Fosun, which has hired Morgan Stanley to help it draw up its final presentation, is in competition with US group Apollo, according to the Portuguese press.

Recently, the Morning Whistle website reported that the board of China Mobile had started the process of analysing the macroeconomic and economic climate of five nations, inclunding Portugal, with a view to investing in them.

In an analysis issued following the news, analysts from Portuguese bank BPI said that, if the investment went ahead, “Portugal Telecom would be the majority likely candidate given its international presence both in Brazil and in Africa.”

China Mobile is the world’s major mobile phone operator by number of customers and Portugal Telecom, which has a market capitalisation of US$5 billion, is within the company’s grasp. 

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