Quad Gas Group, a consortium of long-term infrastructure investors, has entered into an agreement with National Grid plc to acquire a 61 percent shareholding in its four regulated gas distribution networks. These networks cover the East of England, North London, North West, and West Midlands, distributing gas to approximately half of the country’s connected households through 130,000 km of gas pipeline.
The gas distribution networks represent approximately 14 percent of the total regulated energy infrastructure sector in Great Britain by regulated asset value and are regulated by Ofgem. The consortium is made up of Macquarie Infrastructure and Real Assets (MIRA), CIC Capital Corporation, Allianz Capital Partners, Hermes Investment Management, Qatar Investment Authority, Amber Infrastructure, and Dalmore Capital.
The transaction is expected to complete in Q1 2017 following regulatory approval. National Grid plc, the vendor, will retain a 39 percent stake in National Grid Gas Distribution.
National Grid plc also announced that they and the Consortium have expressed an interest in relation to the potential future sale and purchase of an additional 14 percent stake, on broadly equivalent financial terms to the Transaction. Further details will be announced if agreement is reached.
Martin Stanley, Global Head of MIRA, said: “This is a well-established business and we are confident that we as investors can continue to provide both high-quality infrastructure for the UK and appropriate risk-adjusted returns for investors.”
Peter Hofbauer, Head of Infrastructure, Hermes Investment Management, said: “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.”
Christian Fingerle, Chief Investment Officer, Allianz Capital Partners, 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 acquisition of National Grid Gas Distribution is a significant investment in the UK’s energy infrastructure, highlighting the importance of long-term investments in critical infrastructure assets. The consortium’s experience in managing utilities and critical infrastructure will likely contribute to the continued provision of high-quality services to customers.
Gavin Tait, Investment Director, Amber Infrastructure, added: “National Grid’s gas distribution business forms a core and essential part of the UK’s infrastructure base. The longstanding and transparent regulatory regime, combined with the assets’ inflation linkage, make the risk-adjusted returns attractive to the investors we advise.”
Alistair Ray, Partner and Chief Investment Officer, Dalmore Capital, said: “We are all experienced, long-term investors in the UK’s critical infrastructure with a track record of delivering reliable services and operational outperformance.”
Macquarie Capital and RBC Capital Markets acted as financial advisers to Quad Gas Group. They provided guidance throughout the transaction process, which is expected to be completed in the first quarter of 2017.
Leave a Reply