SSE sells gas network operator for £1.23bn
SSE has agreed to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) to a consortium comprising existing SGN shareholder Ontario Teachers' Pension Plan Board and Brookfield Super-Core Infrastructure Partners for £1.23bn.
The FTSE 100 company said the transaction was based on an effective economic date of 31 March, with the consideration in cash.
It was expected to complete within the current financial year, and remained conditional on certain regulatory approvals.
SSE initially acquired a 50% equity share in SGN in 2005 for a total of £505m, before selling a 16.7% stake to a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) in 2016.
The consortium had also agreed to acquire the 16.7% stake in SGN owned by ADIA.
SGN includes Scotland Gas Networks and Southern Gas Networks, two of the eight regulated gas distribution networks in England, Wales and Scotland, in addition to SGN Natural Gas, which provides gas to customers in the west of Northern Ireland as well as other non-regulated ancillary businesses.
The deal would conclude SSE's £2bnplus disposals programme announced in June 2020, with total proceeds amounting to over £2.7bn.
SSE said the programme had realised “significant” value from non-core assets while intensifying its strategic focus on its core low-carbon electricity businesses and the transition to net zero.
The disposal proceeds would reduce net debt in the short term, and would help support the delivery of SSE's capital investment plans.
“SGN has been a hugely successful investment for SSE during the past 16 years,” said finance director Gregor Alexander.
“It is a strong business delivering consistently for customers and will have a key role to play in the future development of the hydrogen economy.
“However, it has become purely a financial investment for SSE as we have sharpened our focus on our low-carbon electricity core, and it is therefore the right time for SGN to continue to thrive under new ownership.”
Alexander said the company saw “significant” growth opportunities in its core networks and renewables businesses in the transition to net zero, with the capital being released through the disposals programme to help it “maximise” the delivery of its low-carbon electricity orientated strategy, and create sustainable long-term value.
“Completion of our disposals programme will leave SSE more streamlined and strategically aligned than ever before, with a business mix that is very deliberate, highly effective, fully focused and well set to prosper on the journey to net zero and beyond.”
At 0838 BST, shares in SSE were up 1.52% at 1,467.5p.