A consortium of long-term infrastructure investors, known collectively as the Quad Gas Group, has acquired a majority shareholding in four regulated gas distribution networks owned by the National Grid.
The group announced today it had agreed to acquire a 61% shareholding in National Grid Gas Distribution (NGGD) while National Grid will retain a 39% stake.
The consortium is made up of Macquarie Infrastructure and Real Assets (MIRA), CIC Capital Corporation, which is a subsidiary of China Investment Corporation, Allianz Capital Partners, Hermes Investment Management, Qatar Investment Authority, Amber Infrastructure and Dalmore Capital.
The four networks cover the East of England, North London, North West and West Midlands and distribute gas to approximately half of the country’s connected households through 130,000 km of gas pipeline.
According to the group, the networks represent approximately 14% of the total regulated energy infrastructure sector in Great Britain by regulated asset value and are regulated by Ofgem.
The transaction is expected to complete in Q1 2017 following regulatory approval.
National Grid also announced that it, along with the consortium, has expressed an interest in the potential future sale and purchase of an additional 14% stake, on broadly equivalent financial terms to the transaction. Further details will be announced if agreement is reached, it said.
Hermes Investment Management said it had been actively pursuing an investment in National Grid’s gas distribution business in the UK for the past year.
Hermes Investment Management head of infrastructure, Peter Hofbauer, added: “National Grid’s Gas Distribution Networks are strategic UK infrastructure assets and are an excellent fit within our core investment strategy, which targets infrastructure businesses that deliver long-term predictable inflation-linked cash flows, with robust cash yield. We look forward to supporting the business in making its important contribution to the UK economy alongside our consortium partners and National Grid.”
MIRA global head, Martin Stanley, described NGGD as a well-established business, adding he was confident the consortium can “continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors”.
He added: “MIRA has long standing operational experience in managing utilities and critical infrastructure in the UK, across Europe and around the world and we are committed to being a long-term investor in and a responsible custodian of National Grid Gas Distribution.”
Allianz Capital Partners chief investment officer, Christian Fingerle, said: “This business provides essential services to 11 million customers in the UK and we are committed to its sustainable development in the long term. The well-established regulatory framework and stable and predictable nature of the business make it an excellent fit with Allianz strategy of investing in core infrastructure assets on behalf of our millions of clients.”
Macquarie Capital and RBC Capital Markets acted as financial advisers to Quad Gas Group.
