National Grid to sell 61% of gas distribution business

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National Grid has agreed to sell a 61% equity share in its gas distribution business to a consortium led by Macquarie Infrastructure and Real Assets (MIRA). The deal values the business at around £13.8bn and will return £4bn to shareholders when it completes during the first half of 2017.

The utility giant currently supplies gas to 11m homes and businesses. It will receive £3.6bn for a 61% equity stake in the company plus £1.8bn from additional debt financing as part of the deal.

Overseas investment

National Grid will retain a 39% share in a new holding company; the other members of the consortium include Allianz Capital Partners, Qatar Investment Authority and the Chinese state-owned China Investment Corporation.

Despite new Government checks on foreign takeovers of UK critical infrastructure, no new rules have yet been put in place and the Government has been supportive of the deal.

‘Assured and agreed’

John Pettigrew, National Grid chief executive, said: “The Government, Ofgem and HSE have been involved in this process right the way through,” and added he was “not expecting there to be any issue”.

“The consortium is made up of a number of parties that have been investing in nationally critical infrastructure in the UK – they are involved in Heathrow, Thames Water, a whole host of areas. We have the assurances and agreements we needed.”

Martin Stanley, global head of Macquarie Infrastructure and Real Assets, said the consortium was confident it could “continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors”.

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