SSE offloads SGN stake to focus on low carbon core
Energy firm SSE is has concluded its disposals programme (pic: Terry Murden)
SSE, the Perth-based energy group, is selling its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) to focus on its low carbon core activities.
The buyer is a consortium comprising existing SGN shareholder Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners.
The £1.225 billion transaction is expected to complete within the current financial year and is 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 has 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.
This deal will conclude SSE’s £2bn plus disposals programme announced in June 2020, with total proceeds amounting to over £2.7bn.
The programme has realised significant value from non-core assets while intensifying SSE’s strategic focus on its core low-carbon electricity businesses and the transition to net zero.
The disposal proceeds will reduce net debt in the short term and will help support the delivery of SSE’s capital investment plans. As indicated in May, SSE will provide an update on these plans at its interim results in November.
Gregor Alexander, finance director of SSE, 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.