Quad Gas Group, a consortium of long-term infrastructure investors, today announces that it has entered into an agreement with National Grid plc to acquire a 61 percent shareholding in its four regulated gas distribution networks.
These gas distribution networks cover the East of England, North London, North West and West Midlands, and distribute gas to approximately half of the country's connected households through 130,000 km of gas pipeline. They 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, which is a wholly owned subsidiary of China Investment 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. The vendor, National Grid plc, an international electricity and gas company headquartered in the UK, will retain a 39 percent stake in National Grid Gas Distribution. National Grid plc also announced today 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.
“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 well-established regulatory framework and stable and predictable nature of the business make it an excellent fit with Allianz strategy of investing in core infrastructure assets on behalf of our millions of clients.”
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. MIRA has long standing operational experience in managing utilities and critical infrastructure in the UK, across Europe and around the world and we are committed to being a long term investor in and a responsible custodian of National Grid Gas Distribution"
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. We look forward to supporting the business in making its important contribution to the U.K. economy alongside our consortium partners Allianz Capital Partners, Dalmore Capital Limited, Amber Infrastructure, Macquarie Infrastructure and Real Assets, CIC Capital and Qatar Investment Authority and National Grid."
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. This is an attractive opportunity for our investors and is fully aligned with Dalmore's investment strategy."
Macquarie Capital and RBC Capital Markets acted as financial advisers to Quad Gas Group.