National Grid has continued its shift towards electricity as it targets net zero, through the sale of a 60% equity interest in its UK gas transmission and metering business.
It has sold it to a consortium of long-term infrastructure investors made up of Macquarie Asset Management and British Columbia Investment Management Corporation for a cash consideration of £2.2 billion.
Additionally, National Grid will receive around £2 billion from additional debt financing when the sale is completed. The transaction valued the gas transmission and metering business at approximately £9.6 billion.
Following the sale, the remaining 40% stake will be held via a new holding company, called GasT TopCo. National Grid has also entered into an option agreement with the consortium for the potential sale of this remaining equity, which could be exercised between 1 January 2023 and 30 June 2023.
The sale increases the proportion of electricity in National Grid’s portfolio, from c.60% to c.70%. It forms part of its wider strategic pivot towards electricity, allowing it to play a central role in the delivery of the UK’s net zero targets, it said.
It follows the acquisition of Western Power Distribution in 2021, and the sale of The Narragansett Electric Company in the US.
“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,” said John Pettigrew, chief executive of National Grid.
“The Consortium has a long-term commitment to the UK with significant experience in owning and operating infrastructure assets. I look forward to our partnership and continuing to deliver safe and reliable gas service at the least cost to consumers.”
National Grid’s focus on “critical and green investment” helped its underlying operating profit rise 47% to £1.4 billion for the six months ended 30 September 2021.