National Grid said in a December 8 statement that it will receive £3.6 billion in cash from the investors for a 61% stake. It will continue to own the remainder of the business. In addition, the company will receive £1.8 billion from additional debt financing.
Macquarie Infrastructure and Real Assets, Allianz Capital Partners, Hermes Investment Management, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships are all part of the infrastructure investment group.
CIC Capital, a unit of China’s sovereign wealth fund, and Qatar Investment Authority are also members of the consortium.
Peter Hofbauer, Hermes’ head of infrastructure, said: “We have been actively pursuing an investment in National Grid’s gas distribution business in the UK for the past year.
“National Grid’s Gas Distribution Networks are strategic UK Infrastructure assets and are an excellent fit within our core investment strategy.”
The investors may also buy a further 14% of the gas distribution networks, National Grid said. Such an agreement would be made on “broadly equivalent financial terms” to the deal already in place, which implied an enterprise value of about £13.8 billion for the UK gas distribution business.
FN reported on December 1 that UK institutions with about $ 2 trillion in assets under their control are looking to increase their stake in illiquid alternative assets, including infrastructure. In March 2015, The Wall Street Journal reported that China’s CIC was looking to increase investment in infrastructure and property in the US and Europe.
Morgan Stanley, Robey Warshaw and Barclays acted as financial advisers to National Grid. Macquarie Capital and RBC Capital Markets acted as financial advisers to Quad Gas Group, the name of the investment consortium.
The transaction is expected to complete in the first quarter of 2017 subject to approval from the European Commission, the executive arm of the European Union.