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    Spain's GN Brings in Allianz, CPPIB as Partners


Spanish utility Gas Natural said late August 3 it is to sell a 20% stake in its gas distribution business in Spain, GNDB, to two funds for €1.5bn.

by: Mark Smedley

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Spain's GN Brings in Allianz, CPPIB as Partners

Spanish utility Gas Natural (GN) said late August 3 it is to sell a 20% stake in its gas distribution business in Spain, GNDB, for €1.5bn to two funds.

Germany's Allianz and Canada Pension Plan Investment Board (CPPIB) will invest €600mn and €900mn respectively. 

“GNDB represents an attractive opportunity for our customers and is fully aligned with our investment strategy of investing in core infrastructure assets,” said Allianz Capital Partners chief investment officer Christian Fingerle.

"We look forward to establishing an enduring partnership with GN and Allianz in this world-class business, and in adding to our investments in Spain,” said the managing director, and global head of infrastructure at CPPIB, Cressida Hogg.

Both are established midstream gas investors

Allianz and CPPIB have been partners for years in Solveig Gas which owns a quarter of Norway's giant 8,300km subsea gas transmission system. Separately Allianz has equity stakes in medium- and high-pressure gas midstream assets including Gas Connect Austria, Czech Net4Gas, and the UK's Cadent Gas.

GNDB is the largest gas distribution network in Spain with over 5.3mn connection points in 1,100 municipalities. GN CEO Rafael Villaseca said that GNDB will remain "an essential part of our investment strategy" and that GN would retain 80% equity. 

GN said the sale implies an enterprise value for GNDB at 100% of €13.935bn, noting that GN will enter into a €6bn long-term intra-group financing agreement with GNDB that would not affect GNF's capital structure or rating. The utility had first disclosed it was in talks with unnamed buyers to divest a 20% stake in GNDB two days earlier on August 1, following a Reuters reportCompletion of the transaction is expected by January 2018.

CPPIB's second big deal in a month

This is the second major energy related transaction announced by CPPIB in less than a month: on July 12, Shell said it is to sell its 45% stake in the Corrib gas field offshore Ireland to the Canadian public investor for $1.23bn; that deal has yet to be completed. Separately Spanish national gas transmission system operator Enagas agreed April to sell a 34.6% stake in a Chilean LNG terminal for $341mn to Omers, another Canadian public fund.

A year of Iberian midstream deal-making

The GNDB deal is one of several Iberian midstream divestments this year. Goldman Sachs is farming down its stake in third-largest Spanish gas distributor Redexis Gas to a UK public pension fund investor this summer, while Portugal's EDP agreed to divest its Spanish gas distributor to a US-Abu Dhabi-Swiss trio in April, and the same month Portuguese energy grids owner REN announced it was buying EDP's Portuguese gas distribution arm.

Eleven months ago, Repsol and Spanish investment fund Criteria Caixa each sold 10% equity in GN itself to New York-based private equity fund Global Infrastructure Partners (GIP), which paid them €3.8bn for the combined 20% interest along with joint control of GN and seats on its board. All three now each have roughly 20% equity in parent company GN.


Mark Smedley