The terms of the sale imply an value for National Grid Gas Distribution of approximately £13.8 billion. On completion, National Grid is set to receive a payment of £3.6 billion in cash from the consortium (subject to adjustments) and will own a 39% minority equity interest in a new holding company for NGGD (“GasD HoldCo”). In addition, National Grid will receive £1.8 billion from additional debt financing.

Infrastructure investment company International Public Partnerships Limited expects to invest up to £275 million, with the remaining risk capital funded by the other consortium partners. International Public Partnerships told the stock exchange that the networks are “well-established, predictable, and strongly cash yielding businesses”.

The consortium will now work with National Grid and other stakeholders to complete the regulatory process necessary to close the deal. It’s expected the sale will complete towards the end of the first quarter of 2017. 

John Pettigrew, chief executive of National Grid, said: ”On completion, National Grid’s portfolio will be rebalanced towards higher growth assets, whilst maintaining a strong balance sheet and supporting our sustainable dividend policy.”

Martin Stanley, Global Head of MIRA, on behalf of the consortium said: ”This is a well-established business and we are confident that as investors we can continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors. 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.”

Rupert Dorey, chairman of International Public Partnership said: ”INPP’s participation in the consortium to acquire National Grid’s gas distribution business offers the Company additional opportunities for highly attractive risk-adjusted returns with strong inflation protection to compliment those it already generates from its existing portfolio. The acquisition is fully in line with our strategy to strengthen the quality of our portfolio and enhance further the inflation protection it continues to offer.”

Related contents:

From the archive: testing the limits of the gas network

Abu Dhabi Investment Authority picks up Scotia Gas Networks stake from SSE

Switch gas to supply heat

Subscribe to New Power for full analysis, comment, interviews and data in our monthly report, and access to our database, or sign up to our FREE e-newsletter for website updates

Not a subscriber? To see if you qualify for our next FREE TRIAL send your name, job title, and telephone number to [email protected]