Yahoo Finance National Grid share price rises as Macquarie aims for £7.3bn stake in gas unit
Australian group Macquarie (MQG.AX) is said to be weighing a bid for a controlling stake in the gas transmission arm of National Grid (NG.L) that could value the unit at over $10bn (£7.3bn).
The financial services firm has made an initial non-binding offer for a majority share through its asset management division, Bloomberg reported.
Bloomberg citing "people familiar with the matter" said talks were ongoing and no decisions had been reached yet.
The asset was also attracting interest from the likes of pension fund investor APG Asset Management, infrastructure specialist IFM and Canada’s Public Sector Pension Investment board (PSP).
The business operates 7,000 kilometres of gas transmission pipes across the UK.
National Grid, one of Britain's largest gas transmitters, had been looking to offload the gas business in an effort to cut its carbon footprint, announcing plans last year to sell the unit as part of its shift to green energy sources.
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The FTSE 100 (^FTSE) firm aims to cut its greenhouse gas emission to net zero by 2050 under the leadership of boss John Pettigrew.
As part of that plan, National Grid spent £7.8bn on Western Power Distribution last year, meaning its UK operation now consisted of 70% electricity assets and 30% gas.
It comes amid a shift in investor behaviour towards environmentally friendly stocks.
Investors' habits are evolving amid a changing sustainable and societal landscape. This has seen a rise in a generation of conscious investors, for whom environment, social and governance (ESG) factors matter.
ESG investments typically seek to balance positive returns against the long-term impact on society or the environment. A recent report showed the ESG market is expected to rapidly grown by 2026.
Shares in the electricity and gas utility firm rose as much as 1.5% in early trade on Friday.
The news comes after National Grid warned in October that the UK was facing a greater threat of blackouts in the winter, as well as tight electricity supplies.
The company’s electricity system operator (ESO) said Britain’s infrastructure will be able to get enough gas to see it through the winter period, but cut its forecast of buffer supply.
Around half of the country’s gas demand is used to heat homes, while another quarter is used to generate electricity.
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It has also been a challenging year for the industry after 28 UK energy suppliers collapsed into administration in 2021, displacing more than 4.3 million customers across the country.
Meanwhile, thousands of UK households face power poverty as soaring energy prices will impact the cost of living.
UK household energy bills will rise by £693 to £1,971 in April as the energy regulator Ofgem announced a 54% energy price cap.
Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year, on average. Households who use prepay meters will see an increase of £708 from £1,309 to £2,017.
National Grid told Yahoo Finance UK that it's not "offering any comment" on the matter, and Macquarie declined to comment.
