LONDON, UK: National Grid plc has agreed to promote a 60% fairness curiosity in its UK gas transmission and metering enterprise (NGG) to a consortium of long-term infrastructure investors.
The consortium is comprised of Macquarie Asset Management, a global asset supervisor and the world’s largest infrastructure manager, and British Columbia Investment Management Corporation (BCI), one of Canada’s largest institutional investors.
As introduced in March 2021, the Transaction forms a half of National Grid’s strategic pivot towards electrical energy and follows final year’s acquisition of Western Power Distribution (WPD), the UK’s largest electrical energy distribution business, and introduced sale of The Narragansett Electric Company (NECO) within the US.
The phrases of the transaction imply an enterprise worth for NGG of roughly £9.6 billion. On completion, National Grid will obtain roughly £2.2 billion in money consideration. Following the transaction, National Grid will personal a 40% minority fairness curiosity in NGG via a brand new holding firm called “GasT TopCo”.
In addition, National Grid will additionally obtain roughly £2.0 billion from additional debt financing at completion. As at March 2022, NGG’s regulated asset worth is estimated to be roughly £6.6 billion and its net debt is estimated to be roughly £3.8 billion.
National Grid has additionally entered into an option settlement with the Consortium for the potential sale of the remaining 40% of fairness in GasT TopCo.
The option could additionally be exercised by the Consortium between 1 January 2023 and 30 June 2023 (subject to change relying on the timing of the closing of the Transaction). If the choice is exercised, the consideration for the Further Interest is anticipated to be paid in money to National Grid on broadly similar phrases to the Transaction, topic to adjustment for dividends paid within the enterprise on the time of exercise. Further particulars will be introduced if the choice is exercised.
Completion of the Transaction will be topic to sure antitrust and regulatory conditions. Subject to those clearances, National Grid expects that the Transaction will full within the second half of calendar year 2022.
John Pettigrew, Chief Executive of National Grid, said: “This transaction additional enhances our role in delivering the UK’s energy transition, pivots our portfolio towards electricity, whereas ensuring the safety of the energy provide for the country. Alongside our plans to make investments as much as £35 billion in energy infrastructure over the subsequent 5 years, the series of transactions introduced final March will strengthen our long-term growth prospects, and drive long-term worth for shareholders.
Today’s announcement is a strong result for all our stakeholders, together with employees and customers. The Consortium has a long-term dedication to the UK with significant expertise in proudly owning and working infrastructure assets. I look ahead to our partnership and persevering with to ship safe and dependable gas service on the least cost to consumers. I would additionally like to thank my colleagues in Gas Transmission and Metering for his or her hard work that has helped us attain this important milestone.”
Martin Bradley, Head of Macquarie Asset Management’s Real Assets team in EMEA, said: “The nationwide transmission system is a critical enabler of the UK’s energy transition, offering the flexibility and reserve energy wanted within the electrical energy system because the deployment of renewable sources of generation accelerates. However, if the UK’s net-zero by 2050 goal is to be met, the nation should have a next-generation transmission spine to energy homes and companies with renewable energy.
Backed by our significant investment, the transmission system will play a number one role in making the community prepared for this transition. In doing so it will support the expansion of hydrogen’s role within the energy combine to ship a aggressive edge to the UK and its industry, whereas working closely with the Government and Ofgem to maintain safety of supply.”
Lincoln Webb, Executive Vice President and Global Head of Infrastructure & Renewable Resources at BCI, said: “This funding aligns well with our diversified portfolio of regulated utilities that securely ship critical services to customers. We believe National Grid’s innovative decarbonisation technique will make sure the enterprise performs a management role in supporting the UK to obtain net zero carbon emissions on goal by 2050, whereas assembly consumer demand for dependable networks.”
Following completion of the Transaction, National Grid intends to make use of proceeds of roughly £4.2 billion towards repayment of the bridge financing facility that was drawn as a half of the acquisition of WPD. For the needs of Listing Rule 10.4, NGG’s gross assets as at 30 September 2021 were £6.1 billion. For the interval 1 April 2020 to 31 March 2021 NGG group generated revenue earlier than tax of £406 million.
www.nationalgrid.com