National Grid plc (NGG,NG.L) announced Monday that it has agreed to sell a 60% equity interest in its UK gas transmission and metering business, NGG, to a consortium of long-term infrastructure investors.
The deal terms imply an enterprise value for NGG of around 9.6 billion pounds. On completion, National Grid will receive around 2.2 billion pounds in cash consideration, subject to customary completion adjustments.
National Grid expects the sale will complete in the second half of calendar year 2022, subject to certain antitrust and regulatory conditions.
Following the deal, National Grid will own a 40% minority equity interest in NGG through a new holding company called “GasT TopCo”.
In addition, National Grid will also receive around 2.0 billion pounds from additional debt financing at completion. As of March 2022, NGG’s regulated asset value is estimated to be around 6.6 billion pounds and its net debt is estimated to be around 3.8 billion euros.
National Grid has also entered into an option agreement with the Consortium for the potential sale of the remaining 40% of equity in GasT TopCo. The option may be exercised by the Consortium between January 1, 2023 and June 30, 2023, subject to change depending on the timing of the closing of the deal.
The Consortium is comprised of Macquarie Asset Management and British Columbia Investment Management Corp., a Canadian institutional investor.
As announced in March 2021, the sale forms part of National Grid’s strategic pivot towards electricity and follows last year’s acquisition of Western Power Distribution, the UK’s largest electricity distribution business, and announced sale of The Narragansett Electric Co. in the US.
Following completion of the sale, National Grid intends to use proceeds of approximately 4.2 billion pounds towards repayment of the bridge financing facility.
John Pettigrew, Chief Executive of National Grid, said, “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. Alongside our plans to invest up to £35 billion in energy infrastructure over the next five years, the series of transactions announced last March will strengthen our long-term growth prospects, and drive long-term value for shareholders.”
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