E.ON, VNG Sell Local Gas Grid to CBA

German utility E.ON and gas firm VNG AG have sold their jointly owned regional gas grid EVG Thueringen to First State Investments, the asset management arm of Commonwealth Bank of Australia (CMWAY) (CBA) , E.ON said.

Sources had told Reuters in August that First State was among final bidders for EVG, which operates a 1,200-km gas grid in the eastern German states of Thuringia and Saxony, adding it could fetch 350-400 million euros ($445-$505 million).

No purchase price was disclosed.

Challenged in an environment of ultra-low interest rates, yield-hungry investors have become keen to snap up regulated energy assets such as gas and power grids, attracted by guaranteed returns.

First State has already bought E.ON's regional gas grid Ferngas Nordbayern GmbH in southern Germany and led a consortium which acquired the local power distribution grid of Finnish utility Fortum for 2.55 billion euros.

"The sale is part of E.ON and VNG's ongoing strategy of optimising their business portfolios," the companies said in a joint statement on Wednesday.

E.ON is trying to capitalise on the growing appetite for infrastructure and energy assets and is currently seeking buyers for its operations in Spain and Italy, aiming to rake in cash to lower its 30 billion euro debt pile, sources have told Reuters.

(1 US dollar = 0.7904 euro)

(Reporting by Christoph Steitz; Editing by Ludwig Burger and Keiron Henderson)