TenneT, the Dutch state-owned electricity grid operator, is in advanced discussions with global investment funds to sell up to $13 billion worth of its stake in its German operations, according to sources familiar with the matter. The move comes as TenneT seeks to raise equity for a massive €200 billion ($217 billion) investment plan through 2034, aimed at supporting Europe’s energy transition and modernizing critical grid infrastructure.
Key Highlights
Stake Sale and Valuation:
TenneT has officially launched the process to sell a significant stake in its German grid business, inviting interested parties-including major global funds-to submit proposals. The German unit is valued at between €20 billion and €25 billion ($21.8–$27.2 billion), with the stake sale potentially reaching up to $13 billion.
Strategic Investment Drive:
The sale is part of TenneT’s broader plan to secure new equity and finance its ambitious investment program, which will require around €200 billion over the next decade to expand and upgrade grids for renewable energy integration. In 2024 alone, TenneT invested over €10 billion, mainly to support the shift to solar and offshore wind power.
Restructuring and IPO Option:
TenneT is restructuring its business by splitting its Dutch and German operations into standalone entities, each with independent financing. Alongside the stake sale, TenneT is also considering a potential IPO of its German division to attract capital from public markets.
German Government Role:
While talks for a full sale to the German government collapsed last year due to Berlin’s fiscal constraints, the door remains open for German state involvement. The government has expressed interest in acquiring a minority stake (potentially 25%) if an official sales process is launched, and is weighing broader infrastructure investments as part of its energy transition agenda.
Market and Credit Implications:
The German grid business accounts for about 70% of TenneT’s EBITDA, making it a critical asset. S&P Global Ratings recently downgraded TenneT’s credit rating to BBB+ due to increased leverage and cash flow pressures, but noted that a successful sale could improve credit quality depending on the use of proceeds and capital structure.
Sector Context:
The sale comes amid rising costs for grid expansion, public resistance to new infrastructure, and a challenging environment for renewable energy projects in Europe. Some energy firms have pulled out of North Sea wind auctions, citing cost and profitability concerns, adding urgency for grid operators to secure stable funding.
Insight
TenneT’s move to sell a substantial stake in its German unit is a landmark moment for Europe’s energy infrastructure sector. The transaction will not only provide much-needed capital for grid modernization but also reshape ownership of one of Europe’s most strategic energy assets. With the German government and global funds both in the mix, the outcome could set a precedent for future public-private partnerships in the energy transition.
“We would welcome the German state being involved in a future financing solution,” said TenneT CFO Anna Freitag, signaling openness to a range of investors as the company navigates its largest-ever capital raise.
The coming months will be crucial as TenneT weighs offers from private funds, considers an IPO, and negotiates with Berlin-decisions that will impact the future of Europe’s green energy ambitions.
Source: Reuters, Bloomberg, Economic Times, Financial Post, Clean Energy Wire
