Sovereign-Wealth Funds Buy Stake in U.K. Gas Business
December 08 2016 - 7:50AM
Dow Jones News
LONDON—A consortium including sovereign-wealth funds from China
and Qatar has agreed to pay £ 3.6 billion ($4.55 billion) for a 61%
stake in the U.K.'s largest gas distributor from National Grid PLC,
the culmination of a year-long sale process.
The deal represents the latest large foreign investment in U.K.
energy infrastructure and comes as investors seek stable returns at
a time of low bond yields. But it could also raise concerns by the
government of U.K. Prime Minister Theresa May.
In addition to the £ 3.6 billion cash payment, the British
company will get £ 1.8 billion from additional debt financing.
Overall, the deal values the unit at £ 13.8 billion, including
debt.
National Grid will retain a 39% stake in the unit and the sale
will allow the company to return £ 4 billion to shareholders and
rebalance its portfolio, which also includes U.K. electricity
networks.
The consortium includes China's CIC Capital Corporation and the
Qatar Investment Authority, as well as investors such as Macquarie
Infrastructure and Real Assets, Allianz Capital Partners and Hermè
s Investment Management. Dalmore Capital and Amber Infrastructure
Ltd./International Public Partnerships Ltd. are also members of the
consortium.
The business is the largest distributor of gas in the U.K.,
delivering gas to nearly 11 million customers in areas such as
London, Birmingham and Manchester.
National Grid said it expects the deal to complete, once it is
cleared by European Union competition authorities, by the end of
March next year.
Shares in the company, which said it was exploring a sale of the
unit in November last year, rose 0.8% in early trading in
London.
Corrections & Amplifications: National Grid's U.K.
gas-distribution business is valued at roughly $17 billion. A
headline on an earlier version of this article incorrectly stated
funds were paying $17 billion for a stake in the business. (Dec. 8,
2016)
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
December 08, 2016 08:35 ET (13:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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