London — Portuguese utility company EDP announced plans to sell €2bn ($2.3bn) worth of assets in Portugal and Spain, and raise another €4bn via an asset rotation programme until 2022 to fund its expansion in renewable energy.

EDP-Energias de Portugal is the target of a €9bn takeover proposal by China Three Gorges (CTG), which the EDP board has rejected as too low and which is opposed by activist shareholder Elliott Advisors.

In a strategic update on Tuesday, EDP also earmarked €12bn for capital expenditure between 2019 and 2022, with 75% of that to be spent in North America and Europe, CEO Antonio Mexia told investors and analysts during a presentation in London.

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“We will generate over €6bn of sale proceeds to reinvest in renewables and strengthen our balance sheet,” EDP said.

“If the opportunity is there we can do more than the €2bn” in asset sales, Mexia said.

The sale of the Portuguese assets reflects some of the demands by activist investor Elliott, which has launched a campaign to try to thwart CTG’s takeover proposal, but the “portfolio optimisation” asset sale plan is somewhat below the €7.6bn proposed by the shareholder.

The €12bn EDP has earmarked for investment, however, appears to go beyond that proposed by Elliott as the utility hopes to add 7GW of renewable power capacity globally, as well as some transmission projects in Brazil, where it plans to retain its overall exposure and could even expand.

As well as calling for the sale of Iberian thermal holdings and minority stakes in Spanish and Portuguese networks, Elliott had urged EDP to sell its Brazilian operation.

“[We] aim at superior execution of existing projects and continuous improvement of operations (in Brazil) … also open to consolidation and value-accretive growth opportunities,” EDP CFO Miguel Stilwell said about Brazil.

EDP, which reported a 53% fall in 2018 net profit on Monday due to tax and regulatory impacts in Portugal, said its investment plan should help it achieve a 7% compound annual growth rate in net profit over 2019-2022, and 5% annual growth in earnings before interest, taxes, depreciation and amortisation (ebitda).

As a result, net profit should finish 2022 above €1bn and ebitda would end that year above €4bn, it said.

EDP shares were up 0.3% at €3.28 at 12:12 GMT, just above the €3.26 per share offer Chinese state-owned CTG made for EDP in  May. The bid by CTG, which is already EDP’s largest shareholder with a 23% stake, still requires various regulatory approvals before it can be formally launched.

In its home market and neighbouring Spain, EDP plans to downsize its thermal and merchant power business. EDP’s operations in Portugal account for 90% of electricity generation and distribution in the country.

Reuters reported exclusively last week that EDP was working on a plan to sell some of its assets in Portugal.

The utility has been running an asset rotation programme — selling some assets to buy others that may offer potentially higher returns — for a few years, mainly focused on wind power projects.

It said it expects to reduce its debt by €2bn from end-2018’s €13.5bn by 2022, when its net debt to ebitda ratio should be less than three times, down from four times currently.

Nearly all of the planned investment will be in regulated assets and long-term power contracts to keep a low-risk profile, EDP said.

In another nod to shareholders, it promised to maintain an “attractive dividend policy” with a minimum €0.19 per share to be distributed, while raising the payout ratio to 75%-85% by 2022 from 65%-75% now.