Britain’s SSE has agreed to divest its entire 33.3% stake in Scotia Gas Networks (SGN) to a Canadian consortium in a $1.70bn (£1.225bn) cash deal.
The consortium comprises Ontario Teachers’ Pension Plan Board (Ontario Teachers’), which is an existing SGN shareholder, and Brookfield Super-Core Infrastructure Partners.
The divestment is a part of SSE’s efforts to focus on its core low-carbon electricity businesses and renewables, as well as transition to net-zero business by 2045.
The transaction concludes SSE’s $2.7bn (£2bn) non-core assets disposals programme, which was launched last year. The programme has achieved total proceeds exceeding $3.75bn (£2.7bn).
SSE finance director Gregor Alexander said: “We see significant growth opportunities in our core networks and renewables businesses in the transition to net zero and the capital we are releasing through our disposals programme will help enable us to maximise the delivery of our low-carbon electricity orientated strategy and ultimately create sustainable long-term value for customers, shareholders and society.
“Completion of our disposals programme will leave SSE more streamlined and strategically aligned than ever before, with a business mix that is very deliberate, highly effective, fully focused and well set to prosper on the journey to net-zero and beyond.”
The transaction is planned to be completed within the current financial year and is subject to certain regulatory approvals.
SGN supplies gas in England, Wales, Scotland and the west of Northern Ireland.
SSE acquired a 50% stake in SGN for $701.8m (£505m) in 2005. In 2016, SSE divested a 16.7% stake to a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), reducing its stake to 33.3%.
In its press statement, SSE also revealed that the Canadian consortium has also agreed to acquire ADIA’s 16.7% stake in SGN for an undisclosed sum.
Upon completion of the transactions, direct shareholders of SGN will include Ontario Teachers’ (37.5%), Brookfield (37.5%) and OMERS Infrastructure (25%).
SSE plans to use the proceeds from the sale of assets to reduce net debt in the short term and fund capital investment plans.