Enel SpA (ENEL.MI), Italy's biggest utility by revenue, will soon try to sell a controlling stake in its Italian natural-gas grid, a person familiar with the matter said.
During a Nov. 11 board meeting, Enel's board gave Chief Executive Fulvio Conti a mandate to announce an international auction for the sale of a majority stake in Enel Rete Gas SpA, which it currently owns nearly all of, the person said.
Enel, which also supplies electricity in Italy and other countries, wants to sell some of its assets to slash some of the debt it accumulated after a joint takeover of Spain's Endesa SA last year, in the world's biggest utility acquisition.
Enel, whose debt stood at EUR51.4 billion ($67.2 billion) on Sept. 30, expects to raise some EUR1.2 billion through the sale, the person said. Italy's gas regulators valued the Enel Rete Gas grid at EUR1.6 billion in January 2008, when it set the grid's fees.
Enel is Italy's second-largest distributor of natural gas after ENI SpA (E), with a market share of about 12%. Its grid serves more than two million customers and delivered 3.5 billion cubic meters of gas in 2007.
It is unclear who could emerge as a potential bidder for the network. In recent years, Russian gas company OAO Gazprom (GZPFY) has been pushing to expand its presence in Italy.
However, the person familiar with the matter said Enel is likely to seek a nonindustrial buyer with whom it can partner. A spokesman for Gazprom declined to comment.
F2i SGR, an Italian investment fund specializing in infrastructure, could be interested in the grid, because it is in line with the assets the fund typically invests in, an F2i spokesman said. The spokesman added that the fund hadn't been in talks with Enel about a potential bid, because the grid hadn't been formally placed on sale.
Enel has appointed Banca IMI SpA, the investment-banking arm of Intesa Sanpaolo, and Morgan Stanley as financial advisers for the auction, the person familiar with the situation said.
The company has set a deadline for expressions of interest by the end of the year.