SSE agrees to sell its stake in Scotia Gas Networks for £1.225 billion

The energy company SSE has agreed to sell its stake in gas distribution operator Scotia Gas Networks Ltd for £1.225 billion.

SSE had initially acquired a 50% equity share in Scotia Gas Networks 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 has also agreed to acquire the 16.7% stake in SGN owned by ADIA.

SGN includes Scotland Gas Networks plc and Southern Gas Networks plc, two of the eight regulated gas distribution networks in England, Wales and Scotland, in addition to SGN Natural Gas Ltd, which provides gas to customers in the west of Northern Ireland as well as other non- regulated ancillary businesses.

SGN is focused on sustainability, having committed to ensuring all its business operations are net zero by 2045, and is taking a leadership role in supporting the transition to a hydrogen economy.

In total, Brookfield will acquire a 37.5% stake in SGN and Ontario Teachers’ will acquire an additional 12.5% of SGN. StepStone Clients will participate in both the Brookfield and Ontario Teachers’ investments. which means following completion of both transactions, SGN’s direct shareholders will comprise, Brookfield (37.5%), OMERS Infrastructure (25% unchanged) and Ontario Teachers’ (37.5%).

Morgan Stanley and Credit Suisse acted as financial advisers and CMS Cameron McKenna Nabarro Olswang LLP as legal advisers to SSE.

The Finance Director of SSE, Gregor Alexander, said:

“SGN has been a hugely successful investment for SSE during the past 16 years. 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.