EDP will pay EUR 750 million in dividends to its shareholders and China Three Gorges (CTG) will earn EUR 165.8 million, recovering more than two thirds of the investment made in 2011 in the Portuguese energy company.
With the new payment – the largest since the Chinese won the last phase privatization of the Portuguese electricity company at the end of 2011 – CTG has already cashed in EUR 1,818 million as an EDP shareholder, more than two thirds (68%) of the investment it made to buy 21.35% of the capital.
CTG paid 2,693 million euros in November 2011, when it became EDP’s largest shareholder. Despite having reduced its capital position over the last few years, especially after the failure of the takeover bid, the Chinese company participated in the last two capital increases, so it now holds a greater number of shares.
The first position reinforcement took place in 2017, more than five years after the initial investment. CTG acquired more than 70 million shares for EUR 208 million, increasing its stake to 23.3% of the capital at that time. The following year, CTG launched a takeover bid which was not successful.
In 2020, it made its first divestment in EDP, with the sale of 1.8% of the capital for EUR 208 million. It was the first shareholding reduction, which would culminate in early 2021 with the sale of another EUR 100 million shares for EUR 534 million.
In the meantime, CTG participated in the capital increase of EDP to finance growth in Spain (investment of EUR 230 million) and another Chinese company with public capital left the capital of the national electricity company. CNIC sold close to 5% of the capital at the end of 2020, disposing of a position it had begun to build in 2015.
CTG’s position at that time reached the lowest weight in EDP (around 19%), but the Chinese strengthened in early 2022 to regain the 20% level. This year’s capital increase and further purchases of shares on the stock exchange, carried out in the meantime, led to CTG currently holding the largest number of EDP shares ever.
In addition to dividends, the Chinese have also benefited from the good performance of EDP’s shares. Despite having paid a 40% premium to win the privatization, it did not take long to see the shares above the invested amount.
Since the end of 2011, EDP’s shares have more than doubled in value, with the most positive years coming during the CTG takeover bid. At around EUR 5, EDP shares are not trading very far from the historic highs it reached at the beginning of 2021. The 872.8 million shares held by CTG are currently valued at EUR 4,364 million.
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The value of the position is not directly comparable (the price has adjusted due to the two capital increases and in the meantime there have been reinforcements and reductions of positions impossible to quantify), but it is much higher than the amount that CTG paid in 2011 (2,693 million euros).
According to Jornal de Negócios, the Chinese state will receive more than EUR 200 million in dividends from the Lisbon stock exchange via stakes in three companies listed on the PSI index: EDP, REN and Mota-Engil.
