LONDON, July 11 (Reuters) - European utility Engie

has joined forces with Canada's second-largest

pension fund to try to buy British power network Electricity

North West (ENWL), according to two sources with knowledge of

the matter.

The consortium formed by Engie and Caisse de dépôt et

placement du Québec (CDPQ) is set to compete with Spanish

utility Iberdrola, which is also preparing a binding

offer ahead of the deadline set by ENWL shareholders in two

weeks, the people said.

ENWL could be valued at over 4 billion pounds ($5.1

billion), a third person familiar with the matter said, with the

two bidders now in direct competition following the withdrawal

of private equity firms such as KKR.

All three sources spoke on condition of anonymity because

the talks are private.

Iberdrola, Engie and CDPQ declined to comment.

Infrastructure investors and utilities are drawn to the

stable, predictable returns of grids like ENWL, particularly

during a period when the renewable energy sector is under

pressure from high interest rates, increased debt costs and

supply chain disruptions.

Iberdrola, with deep pockets after the sale of assets in

Mexico, started preparing an offer for ENWL in November, Reuters

reported previously.

Earlier this year, the Spanish group revealed plans for net

investments of up to 36 billion euros ($39 billion) by 2026,

with nearly two-thirds of this figure being allocated to

electricity grids.

Buying ENWL could help Iberdrola connect areas that it

already serves through its Scottish Power business.

For its part, Engie is eager to augment its exposure to

regulated assets like power and gas networks, aiming to increase

their contribution to its core earnings from the current 35% to

50% by 2026.

The French company has suffered from political uncertainty

in its home market and its shares have lost around 8% in 2024.

Analysts from Morgan Stanley said in a note this week that the

risk of an increase in France's windfall tax on the energy

sector had been partly priced in to Engie´s shares.

ENWL is owned by a consortium led by Japan's Kansai Electric

Power Co. ( KAEPF ) and investment fund Equitix, which

both own 40% stakes, the company's annual report shows.

($1 = 0.7782 pounds)

($1 = 0.9217 euros)