FILE PHOTO: The land station of TenneT is seen at de Maasvlakte in Rotterdam, Netherlands April 19, 2023. REUTERS/Piroschka van de Wouw/File Photo

By Bart H. Meijer, Christoph Steitz and Andres Gonzalez

THE HAGUE/LONDON (Reuters) -The Dutch government is selling 46% of power grid operator TenneT's German unit to a consortium of investors for up to 9.5 billion euros ($11.3 billion), it said on Wednesday, kicking off the separation from a business it has been trying to divest for years.

The sale to a consortium of Dutch pension fund manager APG, Norges Bank and Singapore's sovereign wealth fund GIC comes as funding requirements for power lines soar across the continent, forcing owners of such assets to seek fresh capital elsewhere.

It follows an unsuccessful attempt to sell TenneT Germany to the German government last year.

Under the agreement, the consortium will take a stake of 46% in TenneT Germany via a private placement of new shares by the Dutch government.

With more than 14,000 kilometres (8,699 miles) of power lines, TenneT Germany is the country's biggest operator of high-voltage transmission grids. TenneT is also the sole grid operator in the Netherlands.

The consortium's investment will provide TenneT Germany with 8.5 billion euros it needs to sustain its credit rating and an extra buffer to limit risks for the Dutch state, the Dutch finance ministry said.

APG'S STAKE IN TENNET GERMANY TO BE 11%

APG said in a statement it would acquire about an 11% stake in TenneT Germany. Norges said it has a 21.8% stake, which would leave GIC with the balance of the 46%.

APG CEO Ronald Wuijster told Reuters it had been working on the deal for more than a year and many investments were needed in European infrastructure.

"We need to work very hard to make our infrastructure better and energy transition is a very important element of that," he said.

"This asset offers us a relatively secure, stable cash flow that is also of great interest for the members of the pension fund," he said, adding that APG sees Germany as a stable and reliable country.

Wuijster said the fund was looking to get a board position.

Germany continues to consider a minority stake in TenneT Germany, Dutch finance minister Eelco Heinen said, after such plans fell apart last year under the previous government. Heinen said he expected more clarity on possible German investments before the end of the year.

Sources told Reuters in May that a sale of new shares in TenneT Germany could raise up to 12 billion euros, either via a private placement or an initial public offering in what could become one of Europe's biggest deals this year.

In a sign of how big funding needs for grid expansion are, TenneT Germany's smaller peer Amprion earlier this month secured 3.2 billion euros from Apollo Global Management in a deal with RWE.

Germany, which already holds minority participation in high-voltage power grids TransnetBW and 50Hertz, has in the past expressed interest in buying a 25% stake in TenneT Germany if there is an official sales process.

($1 = 0.8494 euros)

(Reporting by Bart Meijer and Christoph Steitz; Additional reporting by Holger Hansen; Editing by Bernadette Baum)