(Yicai Global) Aug. 6 -- China Southern Power Grid, the smaller of the country's two state-owned distributors, will take a 25-percent stake in Luxembourg public utility Encevo.

The Guangzhou-based company will purchase the stake from private equity firm Ardian, state-backed news outlet The Paper reported.

The deal will mark the utility's second major overseas move this year following the acquisition of a 27-percent stake in Chile's largest transmission firm Transelec in March. The deal is estimated to be worth some EUR400 million (USD463 million), Reuters reported, quoting two sources familiar with the transaction.

Companies like Encevo are huge attractions to Chinese power grid companies as they enjoy a steady investment environment in Europe and stable returns as local governments supervise and guarantee most of their revenue and profits. After deducting fees for special projects, the company posted earnings before interest, taxes, depreciation and amortization of EUR204 million last year, down 17.3 percent annually.

Encevo employs some 1,500 workers and operates over 10,150 kilometers of power lines and over 3,700 kilometers of gas pipelines. It carries out businesses in various energy fields through two subsidiaries Creos and Enovos Luxembourg. Specifically, Creos focuses on power grid and natural gas network operations while Enovos Luxembourg sells energy to clients in Luxembourg and Germany while owning wind, biogas, solar and hydro resources.

China Southern Power Grid builds and operates power grids in China's five southern provinces, supplying electricity for 230 million people.

Editor: William Clegg