Kreditanstalt für Wiederaufbau ( KfW ), acting on behalf of the German government, has acquired a 25.1% stake in TenneT Holding, a power transmission company owned by the Dutch government, for €3.3 billion ( US$3.93 billion ).

The transaction follows up on the previously announced equity commitment of €9.5 billion from three institutional investors – Dutch pension fund APG, Singapore sovereign wealth fund GIC, and Norwegian sovereign wealth fund manager Norges Bank Investment Management ( NBIM ). 

The German state will participate in subsequent capital contributions made by the three institutional investors to fulfil TenneT Germany's equity needs over time and maintain its 25.1% stake. The three institutional investors are expected to secure a 46% stake in TenneT Germany.

ABN Amro and Lazard acted as financial advisers to TenneT on the transaction, while De Brauw Blackstone Westbroek and Hengeler Mueller served as legal advisers. KfW was advised by Citi and the law firm CMS.

Energy security

TenneT Germany needs to invest about €110 billion by 2030 to upgrade the electricity grid and support Germany's energy transition. The Dutch state, as the previous sole shareholder, was unwilling to fund these requirements for a foreign network on its own balance sheet.

The transaction, thus, reinforces TenneT Germany's capital structure, providing "planning security" for critical grid reinforcement and the connection of offshore wind farms.

The deal also allows the German government to exert greater influence over critical energy infrastructure, including veto rights on major strategic decisions and the power to appoint board members. This is seen as essential for ensuring the country's energy security in a changing geopolitical landscape.

For the Dutch government, the sale reduces its financial exposure to German infrastructure while generating €3.3 billion in proceeds, which will be used to repay a shareholder loan. 

At the same time, TenneT Holding will retain at least 28.9% of the shares in TenneT Germany, enabling it to fully participate in all important decisions. The synergy benefits of the collaboration between TenneT Netherlands and TenneT Germany will be largely retained, as both companies are jointly developing infrastructure to connect wind farms in the North Sea to the European electricity grid.

TenneT Holding chief executive officer Manon van Beek comments: “We warmly welcome the German state via KfW as a shareholder in TenneT Germany. The German state represents one of the most important stakeholders for TenneT in Germany. This co-shareholding creates valuable additional involvement, with particular attention to the increasing investment agenda and the new geopolitical reality. TenneT remains committed to ensuring a reliable, sustainable, and affordable electricity supply.”