National Grid Said to Plan Sale of Gas Distribution Assets

  • Assets serve 11 million customers and could fetch $15 billion
  • Long-distance, high-pressure pipelines said not part of sale

National Grid Plc, operator of U.K. electricity and gas-pipeline networks, plans to seek buyers for its regional gas distribution business, according to people familiar with the situation.

The assets being targeted for sale serve almost 11 million customers, and could fetch as much as 10 billion pounds ($15 billion) if disposed as a whole, the people said, asking not to be identified discussing a private matter. The business could also be carved into parts, or a minority stake sold in the whole system, they said, with infrastructure and pension-fund investors the likeliest buyers.

No financial adviser has yet been appointed for the sale, which is expected to kick off early next year, and National Grid could still decide against proceeding with the disposal, the people said. The potential sale comes days after the company said Chief Executive Officer Steve Holliday would retire next year, to be replaced by John Pettigrew, currently executive director for the U.K. Holliday is leaving after 14 years at the company.

National Grid declined to comment.

Depending on the scale of such disposal, a special dividend or an acquisition are both options for proceeds, Citigroup Inc. said in a note to clients.

National Grid’s shares rose as much as 0.8 percent to 901.70 pence and traded at 900.9 pence at 8:19 a.m. in London. The stock has dropped 1.7 percent this year, compared with a 3 percent drop in the FTSE 100 index.

National Grid’s four regional gas distribution networks connect customers in the West Midlands, eastern England and the north-west of the country as well as parts of London. The company’s national grid of long-distance, high-pressure transmission pipelines won’t be part of any sale.

Utilities firms are considering the sale of distribution assets as infrastructure and pension funds seek to spend their growing capital on businesses that produce steady flows of cash. EDF, France’s largest utility, this month said it’s reviewing whether to sell its national electricity transmission network.

The planned sale was first reported by The Sunday Times.

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