National Grid has sold a 61% stake in its gas distribution business to a consortium of investors. The deal values the distribution business at £13.8bn.
National Grid will receive £3.6 billion in cash from the Consortium (subject to certain completion adjustments) and will own a 39% minority equity interest in a new holding company. In addition, National Grid will receive £1.8 billion from additional debt financing.
Members of the consortium include: Macquarie Infrastructure and Real Assets (MIRA), Allianz Capital Partners, Hermes Investment Management, CIC Capital Corporation, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships.
Subject to European Commission clearance, National Grid said it expects to complete the deal by 31 March 2017. It may also sell a further 14% to the consortium.
“Today’s announcement follows a highly competitive sale process. It represents an important milestone in the evolution of National Grid and is a good outcome for our customers, employees, and shareholders. The Consortium, has a long-term commitment to the UK with significant experience in owning infrastructure assets, and we look forward to working with them as the gas distribution business continues to deliver a safe and reliable service,” said National Grid CEO John Pettigrew.
“On completion, National Grid’s portfolio will be rebalanced towards higher growth assets, whilst maintaining a strong balance sheet and supporting our sustainable dividend policy.”
Martin Stanley, global head of MIRA, on behalf of the consortium said: “This is a well-established business and we are confident that as investors we can continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors. MIRA has long standing operational experience in managing utilities and critical infrastructure in the UK, across Europe and around the world and we are committed to being a long term investor in and a responsible custodian of National Grid Gas Distribution.”
National Grid will return £4bn to shareholders following completion of the transaction.
See the full announcement here.