National Grid plans £4bn cash return from selling stake in gas business

8th Dec 2016 07:05

(ShareCast News) - National Grid is to sell a 61% stake in its gas distribution business to a consortium of investors for about £3.6bn and then return £4bn to shareholders.The FTSE 100 company has agreed to sell its interest in the gas distribution business, subject to approval from the European Commission, to a group of investors consisting of Macquarie, Allianz Capital, Hermes Investment Management, CIC Capital, Qatar Investment Authority, Dalmore Capital, Amber Infrastructure, and FTSE 250-listed International Public Partnerships, which will provide £275m, for £3.6bn in cash by the end of March 2017.It will retain a 39% minority stake in the new holding company for the business and receive £1.8bn from additional debt financing.Following the sale the company is to return £4bn, 75% of which will be through a special dividend in the second quarter of 2017 and a share buy-back scheme. It will also distribute £150m to benefit energy consumers.Net proceeds are from retaining £700m of the additional debt financing, in order to maintain the 39% stake in the new holding company, and after deduction of £500m worth of costs.The company said that it, along with consortium, will consider selling an additional 14% stake in the gas distribution in the future.National Grid's chief executive, John Pettigrew, said: "The consortium, has a long-term commitment to the UK with significant experience in owning infrastructure assets ... On completion, National Grid's portfolio will be rebalanced towards higher growth assets, whilst maintaining a strong balance sheet and supporting our sustainable dividend policy."Martin Stanley, global head of Macquarie, added: "This is a well-established business and we are confident that as investors we can continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors."