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March 28, 2022

National Grid to offload 60% stake in UK gas business for $5.5bn

The buyers, Macquarie and BCI, will also have an option to buy the remaining stake in National Grid Gas.

National Grid has agreed to offload a 60% interest in its UK gas transmission and metering business (NGG) to Australia’s Macquarie Asset Management, and British Columbia Investment (BCI) Management.

Upon completion of the transaction, National Grid will receive cash a consideration of approximately $2.89bn (£2.2bn), and nearly $2.6bn (£2bn) from additional debt financing.

The deal values the units at approximately $12.7bn (£9.6bn), the company said in its press statement.

The sale forms part of National Grid’s efforts to shift its focus towards electricity.

National Grid CEO John Pettigrew said: “This transaction further enhances our role in delivering the UK’s energy transition, [and] pivots our portfolio towards electricity, whilst ensuring the security of the energy supply for the country.

“Alongside our plans to invest up to £35 billion in energy infrastructure over the next five years, the series of transactions announced last March will strengthen our long-term growth prospects, and drive long-term value for shareholders.”

In addition to owning and operating the regulated gas National Transmission System (NTS) in Great Britain, NGG owns a regulated gas metering business.

NGG operates an estimated 7,660km of high-pressure gas pipe, and 23 compressor stations, which connect to eight distribution networks and other third-party independent systems.

Macquarie Asset Management EMEA real assets team head Martin Bradley said: “The national transmission system is a critical enabler of the UK’s energy transition, providing the flexibility and reserve energy needed in the electricity system as the deployment of renewable sources of generation accelerates.

“Backed by our significant investment, the transmission system will play a leading role in making the network ready for this transition.”

Subject to certain antitrust and regulatory conditions, the transaction is planned to complete in the second half of 2022.

Following the deal, the National Grid will retain a 40% stake in NGG via a new holding company, GasT TopCo.

As part of this transaction, an option agreement has been signed by the consortium with National Grid for the potential acquisition of the remaining stake in NGG.

Last year, National Grid awarded a five-year contract to the engineering and consulting group Wood to upgrade its gas transmission assets.

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