By Sergio Goncalves and Andrés González
LISBON/MADRID, Sept 5 (Reuters) - Portuguese utility EDP EDP.LS is expected to put Spain's Iberdrola IBE.MC , Norway's Statkraft and Austria's Verbund VERB.VI on a shortlist of final bidders for its hydro assets, three sources with knowledge of the matter told Reuters.
The assets are valued at more than 2 billion euros.
The sale, led by Morgan Stanley (NYSE:MS) and UBS, is part of a wider portfolio clean up as EDP wants to plough in more cash into its renewable energy business.
It has drawn interest from other European utilities and investment funds including Enel ENEI.MI , Engie ENGIE.PA , Macquarie and Brookfield, the sources said.
EDP contacted about ten bidders earlier this year to request expressions of interest, one of the sources said, and received about eight indicative bids.
It is now looking to shortlist five or six bidders, the sources said.
Iberdrola, Statkraft and Verbund are all expected to make it through to the second round of bidding while it remains unclear whether Engie, Macquarie and Brookfield will advance to the final stages, the sources said.
"The shortlist includes five names, but another potential candidate may still rejoin the process", one of the sources said.
Enel placed an offer through its Iberian unit Endesa ELE.MC but it was considered too low by EDP, he said, adding the Italian firm could still advance in the auction if it was prepared to raise its offer.
Representatives at EDP, Iberdrola, Statkraft, Brookfield, Macquarie, Enel and Engie declined to comment.
Asked for its interest in EDP's assets, an spokesman for Verbund said: "Fundamentally we look at all the options that fit our renewable energy strategy" without elaborating further.
The Portuguese firm is also in the process of offloading its thermal holdings and some stakes in Spanish and Portuguese networks.
Binding bids for EDP's hydro assets are due in late September, but negotiations may stretch in October, another source said.
"EDP is not under pressure as it has until the end of the year to close this dossier", he added.
Naturgy NTGY.MC reviewed the assets as it was sent a copy of the information memorandum but decided against bidding, the sources said. Naturgy declined to comment.
EDP reported a 7% increase in net profit during the first six months of 2019 backed by the strength of his renewable unit, but the results were affected by fiscal pressure in the country which affected its dams among other businesses. (Aditional reporting by Stephen Jewkes, Nerijus Adomaitis, Clara Denina and Alexandra Schwarz-Goerlich, editing by Jane Merriman)