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    UK's NGrid Sells Majority Stake in Gas Distribution



National Grid has agreed to sell a 61% stake in its distribution business to a Macquarie-led consortium including Chinese and Qatari sovereign wealth funds.

by: Mark Smedley

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Corporate, Mergers & Acquisitions, Investments, TSO, News By Country, China, Germany, Qatar, United Kingdom

UK's NGrid Sells Majority Stake in Gas Distribution

National Grid, Britain’s gas and power grids operator, announced December 8 it has entered into an agreement to sell a 61% stake in its medium-pressure UK gas distribution business (NGGD) to a seven-company consortium led by Australia’s Macquarie Infrastructure and Real Assets (MIRA) that includes Chinese and Qatari sovereign wealth funds CIC and QIA, and Germany's Allianz. All four already own gas network interests in Europe.

NGrid said the deal implies a valuation for 100% of NGGD of £13.8bn ($17.4bn) for four gas distribution networks serving some 10.9mn commercial and residential premises.

In return for divesting a 61% stake, on completion National Grid (NGrid) will receive a payment of £3.6bn cash while retaining a 39% minority equity interest in a new holding company for NGGD. In addition, NGrid will receive £1.8bn from additional debt financing.

Together these don’t add up to the £8.4bn that would equate to 61% of £13.8bn. However NGrid and the consortium have also expressed an interest in relation to the potential future sale and purchase of an additional 14% of equity in NGGD, details of which they have yet to divulge.

NGrid's ownership of its high-pressure gas and high-voltage power transmission systems is unaffected by this sale.

NGrid intends to return £4bn of net proceeds to shareholders, upon completion, through a combination of a special dividend (together with a share consolidation) and share buy-backs. Further announcements regarding the nature and timing of the capital return will be made in due course

The other three consortium members are UK-based funds Hermes, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships.

Subject to merger clearance from the European Commission, NGrid expects the transaction to  complete on or prior to March 31 2017.

Martin Stanley, global head of MIRA, on behalf of the consortium said: "This is a well-established business .. We are committed to being a long term investor in and a responsible custodian of National Grid Gas Distribution."

UK energy utility SSE in October said it would reduce its stake in Scotia Gas Networks to 33.3% through a sale to Abu Dhabi's sovereign wealth fund.


Mark Smedley