National Grid nets £3.6bn in gas pipeline stake sale

A team of international investors, including the Chinese state, is to take a majority stake in National Grid (LSE: NG.L - news) 's gas pipeline business.

The UK's power network operator confirmed it was offloading a 61% holding to a consortium led by Australian investment bank Macquarie and it was to net £3.6bn in cash as a result and a further £1.8bn in debt financing.

The deal values the division - which has 82,000 miles of pipeline delivering gas to 11 million UK homes and businesses - at almost £14bn when debt is excluded.

Some £4bn of the proceeds will be given to National Grid shareholders next spring, subject to regulatory approval.

The company also plans to give a voluntary payment of £150m to assist UK energy consumers.

Other investors include the Qatar Investment Authority and Hermes, the City asset manager owned by BT's pension fund.

Sky News reported during the year-long auction how the UK firm's involvement was seen as bolstering the bid's chances amid concerns within Government about foreign ownership of key UK assets.

A deal to give the go-ahead to the Hinkley Point nuclear power station in Somerset was sanctioned by Downing Street only after safeguards were included relating to future changes of ownership.

A rival bid for the gas arm had been submitted by a Chinese-led team.

National Grid chief executive John Pettigrew said the deal "represents an important milestone in the evolution of National Grid and is a good outcome for our customers, employees, and shareholders".

He added: "The consortium has a long-term commitment to the UK, with significant experience in owning infrastructure assets, and we look forward to working with them as the gas distribution business continues to deliver a safe and reliable service."

Unions have raised concerns, with Unison general secretary Dave Prentis saying: "The experience of Thames Water customers when Macquarie was running the show should have been a red flag to ministers and regulators as how unsuitable this company is to be in charge of the UK's gas supply.

"Macquarie has poor form already - in building up huge company debt, repatriating massive dividends to the southern hemisphere and charging customers more for a much poorer service."

The Australian firm's global head, Martin Stanley, said: "This is a well-established business and we are confident that we as investors can continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors.

"MIRA has long standing operational experience in managing utilities and critical infrastructure in the UK, across Europe and around the world and we are committed to being a long term investor in and a responsible custodian of National Grid Gas Distribution."