National Grid has agreed to sell a majority stake in its gas pipe network to a group of investors including Chinese and Qatari sovereign wealth funds in a deal valuing the business at about £13.8bn.
The UK’s power network operator said it would sell a 61% shareholding in the gas division to a consortium led by Macquarie, an Australian investment bank. The deal is also backed by China Investment Corporation (CIC) and Qatar Investment Authority, along with fund managers including Hermes and Allianz.
The sale could test the government’s approach to foreign investment in UK infrastructure after a review of the rules was announced in September. The review, which is not completed, followed the government’s decision to approve the building of the Hinkley Point C nuclear power station with Chinese backing.
National Grid will return £4bn to shareholders after the deal and hand out a £150m payment to benefit British energy consumers. It will also work with Ofgem, the industry regulator, to decide how best to use the £150m payout to benefit energy customers.
National Grid will receive £3.6bn cash for the stake in its gas arm, as well as a further £1.8bn in debt financing. It will keep a 31% stake in the business. Macquarie and CIC will hold the two largest stakes, at 14.5% and 10.5% respectively, followed by Allianz with a 10.2% stake. The Qataris will hold an 8.5% stake.
The sale process has been closely watched given the foreign interest in the national gas pipe network. The industry regulator Ofgem warned in September that it would not support buyers if they chose to overpay for the hotly contested assets. Investors are keen to take stakes in infrastructure because the assets pay reliable returns amid volatile financial markets.
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