![]() ![]() It also said that its investment would make the UK network ready for the energy transition, and support the expansion of hydrogen’s role in the energy mix. Macquarie said on March 27 that it intended its ownership of the 7,660-kilometre transmission system to last “over multiple regulatory periods”. National Grid intends to use its 4.2 billion pounds of proceeds to repay part of the bridge financing facility related to its acquisition of Western Power Distribution in 2021. If the option is exercised, the consideration is expected to be paid in cash to National Grid on broadly similar terms to the current deal, less dividends paid by the business. National Grid has also entered into an option agreement with the buyers for the potential sale of the remaining 40% of equity in GasT TopCo, to be exercised between Jan. National Grid’s gas transmission business had a regulated asset value of approximately 6.6 billion pounds, and its net debt was 3.8 billion pounds. ![]() It will also receive 2 billion pounds on completion of the deal. On completion, National Grid will receive approximately 2.2 billion pounds in cash, and retain a 40% minority equity interest via a new holding company called GasT TopCo. The terms of the deal imply an enterprise value for the assets of 9.6 billion pounds. National Grid said on March 27 that it would sell a 60% equity interest in its UK gas transmission and metering business to a consortium including Macquarie Asset Management and British Columbia Investment Management Corporation. (The authors are Reuters Breakingviews columnists. In the meantime, National Grid will have the green edge. While it talks of “enabling the UK to accelerate its transition away from fossil fuels”, pumping hydrogen through gas pipelines requires economically unproven technologies, including the capture and storing of carbon, that may only start to pan out in the 2030s. Macquarie, meanwhile, implicitly assumes that Britain will depend on natural gas for decades to come. National Grid boss John Pettigrew is making a hard-to-reverse bet that the company’s future lies with electricity rather than gas. The Macquarie consortium gets a stable regulated business that made an operating profit of 387 million pounds in the six months to the end of September. That’s roughly in line with what fellow British utility SSE (SSE.L) attained when it sold its Scotia gas networks last year. ![]() The deal implies a valuation of about 1.3 times the value assigned to the gas transmission business by the UK regulator, after stripping out its 800 million pound metering business, which is also being sold. National Grid gets 4.2 billion pounds in cash and shifts the gas business off its balance sheet, while keeping a minority shareholding. Under the terms of the deal the unit will borrow another 2 billion pounds, allowing Macquarie to buy a 60% stake for just 2.2 billion pounds. The gas business currently has equity worth 5.6 billion pounds and 4 billion pounds of debt, which National Grid consolidates. Both visions are valid, but mask what for now is a conventional leveraged takeover of an infrastructure asset. Macquarie thinks that the 7,660 kilometres of high-pressure UK pipelines could become a conduit for hydrogen, a potentially lower-carbon gas that could play a key role in energy storage. National Grid is betting that electricity demand will surge over the next few decades as key sectors like transport switch from oil to electrons as a power source. Though both sides reckon the deal speeds the shift away from carbon, the UK company has the edge over the Australian finance house. Now it has sold a 60% stake in its gas transmission arm to a consortium led by Macquarie (MQG.AX) at a valuation of 9.6 billion pounds ($13 billion), including debt. A year ago, the $54 billion company that runs Britain’s electricity grid splashed out $11 billion on a UK power distribution business. LONDON, March 28 (Reuters Breakingviews) - National Grid (NG.L) is buffing up its green credentials. ![]()
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