(Reuters) -Britain’s National Grid said on Sunday it would sell a 60% stake in its British gas transmission and metering business to Australia’s Macquarie Asset Management and British Columbia Investment Management Corporation as it shifts towards electricity.
The deal implies an enterprise value for the unit of about 9.6 billion pounds ($12.7 billion), the company said in a statement.
Macquarie said its investment will ensure the transmission system will play a leading role in delivering the UK’s net-zero by 2050 target, by supporting hydrogen’s role in the energy mix.
National Grid will receive about 2.2 billion pounds in cash and about 2 billion pounds from additional debt financing following completion of the deal.
“This transaction further enhances our role in delivering the UK’s energy transition, pivots our portfolio towards electricity, whilst ensuring the security of the energy supply for the country,” John Pettigrew, chief executive officer of National Grid said.
The company’s announcement comes as Europe’s tight gas market has sent wholesale energy prices soaring, exacerbated by the Russian invasion of Ukraine.
Multiple energy suppliers in Britain have gone out of business since last September as prices in the country have rocketed and the regulator Ofgem’s price cap prevented suppliers passing on rising costs to customers.
National Grid’s gas transmission business includes a 7,000-kilometre pipe network across the UK, among the largest gas transmission businesses in the country.
Following the transaction, the London-listed company said it will own a 40% minority stake via a new holding company called GasT TopCo but it also has an option to sell this remaining stake.
The transaction does not require National Grid’s shareholders’ approval and is expected to be completed in the second half of 2022.
(Reporting by Jahnavi Nidumolu in Bengaluru; Editing by Edmund Blair and Elaine Hardcastle)
