SSE has agreed to sell its 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) for £1,225 million.
The deal – which sees the stake sold to a consortium comprising Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners – concludes SSE’s £2 billion plus disposals programme.
Announced in 2020, this has now achieved total proceeds of over £2.7 billion, with SSE stating it has intensified its strategic focus on its core low-carbon electricity business and the transition to net zero.
Specifically, the company is focusing on developing, building, operating and investing in the electricity infrastructure and businesses needed in the transition to net zero, with its strategic focus being on renewables and regulated electricity networks, businesses with strong, net zero-aligned growth potential and the operation of world-class, highly technical electricity assets.
“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,” Gregor Alexander, Finance Director of SSE, said.
The disposal proceeds are to reduce net debt in the short term as well as help support the delivery of SSE’s capital investment plans, with an update to be released on these plans at the company’s interim results in November.
The company's most recent results saw its operating profit take a £170 million hit from COVID-19, although this was towards the lower end of the guided range.
Reflecting its focus on networks and renewables, the results saw its Transmission arm grow slightly – with operating profit increasing from £218.1 million to £220.9 million – while its Renewables arm increased significantly from £576.3 million to £731.8 million.
The sale of the stake in SGN is expected to complete within the current financial year, and is conditional on certain regulatory approvals.
SSE originally acquired a 50% equity share in SGN in 2005 for a total of £505 million, before selling a 16.7% stake to a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) in 2016. The Consortium has also agreed to acquire the 16.7% stake in SGN owned by ADIA.