UPDATE 1-3i Infrastructure to sell stake in Finnish power company Elenia

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Dec 13 (Reuters) - London-listed 3i Infrastructure Plc said on Wednesday it had agreed to sell its stake in Finnish power company Elenia Oy to Allianz Capital Partners , Australian infrastructure investor Macquarie and the State Pension Fund of Finland.

Two sources familiar with the matter said the price equated to an enterprise value - debt plus equity - for the whole of Elenia of around 3.5 billion euros ($4.2 billion), making it one of Europe's biggest infrastructure deals of 2017.

The deal follows several sales of regulated grid businesses in recent years as European energy companies have sought to cut debt and raise funds for new infrastructure projects.

Finlands Fortum recently sold all of its Scandinavian distribution assets for 9.3 billion euros.

3i Infrastructure said the sale of its 39.3 percent stake in Finland's second-largest power company to the consortium would generate gross proceeds of about 725 million pounds ($968 million).

The Macquarie and Allianz consortium beat competition from China Southern Power Grid and a group of investors including Queensland Investment Corporation (QIC) and the Netherlands' second-largest pension fund PGGM, according to people familiar with the matter.

Elenia made a core profit of 168.4 million euros last year on revenue of 315.3 million euros. It services about 420,000 customers in more than 100 municipalities.

Since the 3i Infrastructure-led consortium acquired Elenia in January 2012 for around 1.5 billion euros, the business has invested over 600 million euros aimed at increasing weather proofing of the network to improve reliability of electricity supply for customers.

"We look forward to our partnership with Allianz Capital Partners, MIRA and Valtion Eläkerahasto (the State Pension Fund of Finland) who will support our continued investment program focused on weather proof distribution of electricity and continuous development of digital services for our customers, Elenia chief executive Tapani Liuhala said.

($1 = 0.7491 pounds)

($1 = 0.8506 euros) (Additional reporting by Jussi Rosendahl in Helsinki and Radhika Rukmangadhan in Bengaluru; Editing by David Evans and Mark Potter)