Chinese state owned China Southern Power Grid Co. is in early talks to acquire a 10% stake worth ~$4.2bn in Abu Dhabi’s flagship Abu Dhabi National Energy Co (TAQA – Arabic for energy). The transaction, if cleared, would be the biggest overseas acquisition by a Chinese company this year. TAQA is the largest utility of oil-rich Abu Dhabi and is controlled by state-run ADQ. It has a monopoly on power and water distribution in the Emirate and has a strategic vision to expand its portfolio from being only an oil and natural gas energy company to include renewable energy consisting of solar and wind power. The lower carbon footprint helps to draw more foreign investors. The Emirate has been looking at offloading 10% stake in the utility since April this year in a bid to attract foreign capital. In the past, the Abu Dhabi government has successfully attracted investments of ~$20bn through a stake sale in the operations of state-owned Abu Dhabi National Oil Co (ADNOC). China Southern Power Grid operates power grid businesses and invests, constructs, and manages electricity power networks.

TAQA’s 3.875% 2024s and 3.4% 2051s were up 0.16 and 0.24 to trade at 108.86 and 104.16 respectively. China Southern’s 3.875% 2023s and 4.25% 2028s were largely flat at 106.54 and 113.29 respectively.

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