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Engie stock rises on asset sale to ACWA Power

Published 19/02/2025, 12:00
© Reuters.
ENGIE
-1.01%

Investing.com -- Shares of Engie (EPA:ENGI) climbed 1% today following the company’s announcement that it has signed an agreement to sell its stakes in various power, gas, and water desalination plants in Kuwait and Bahrain to ACWA Power. The move is seen as a strategic step towards simplifying the company’s structure and focusing on a cleaner energy mix.

Engie is divesting its 17.5% stake in the 1.5 GW Az Zour North gas and desalination plant in Kuwait, along with its 50% stake in the associated operations and maintenance company. Additionally, the company is selling its interests in Bahrain, which include a 45% stake in the Al Dur 1.2

GW gas and desalination plant, a 45% stake in the Al Ezzel gas-fired power plant, and a 30% stake in the Al Hidd gas and desalination plant. This transaction is in line with Engie’s roadmap to achieve net zero by 2045 and will mark the company’s exit from Kuwait and Bahrain, streamlining its geographical presence.

The deal is expected to generate proceeds of €660-665 million, which appears to be above Engie’s trading multiple. In 2023, Engie’s AMEA Flexible Generation associates and joint ventures contributed €283 million of recurring EBIT with 9.1 GW of installed pro-rata capacity. The assets being sold represent 1.5 GW of this capacity.

Analysts at Morgan Stanley (NYSE:MS) commented on the transaction, stating: "Assuming a similar contribution for the whole fleet but also looking at financial statements provided on the Saudi Stock Exchange website, we believe the €660-665 million valuation disclosed would imply a P/E of 10-14x, higher than where Engie’s shares trade (8.5-9x on average over 2025-27e). We believe proceeds could be used by Engie for deleveraging and or growth reinvestments, as part of its growth plans. We think more details on financial impact could be disclosed on the day of Engie’s FY24 results (27 February)."

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