Scottish energy company SSE has signed an agreement to sell its entire 33.3% stake in natural gas distributor Scotia Gas Networks (SGN) to Canadian investors Ontario Teachers’ Pension Plan and Brookfield’s consortium for £1.2 billion in cash. The consortium partners also agreed to acquire a 16.7% stake in SGN held by the Abu Dhabi Investment Authority (ADIA), which is engaged in the distribution of natural gas to approximately 6 million households and businesses in Scotland and southern England.

The Shanghai Stock Exchange originally acquired a 50% stake in SGN in 2005 for 505 million pounds. Later, it sold 16.7% of its shares to a wholly-owned subsidiary of ADIA in 2016. Based on these two transactions, SGN’s existing shareholder Ontario Teachers’ will acquire an additional 12.5% stake in SGN, increasing its stake to 37.5%, and Brookfield will acquire a 37.5% stake. After the transaction is completed, Ontario Teachers' and Brookfield will each hold 37.5% of the shares. OMERS Infrastructure will continue to hold a 25% stake in the company.

The equity sale is part of the Shanghai Stock Exchange’s efforts to focus on renewable energy and regulated power networks and companies that are said to have the potential for net-zero alignment. The transaction includes the Scottish Natural Gas Network and the Southern Natural Gas Network, which are one of eight regulated natural gas distribution networks in England, Wales and Scotland. It also includes SGN natural gas and other unregulated ancillary companies that provide natural gas to customers in western Northern Ireland.

The transaction marks the completion of the Shanghai Stock Exchange’s settlement plan of over £2 billion announced in June 2020. According to the plan, the company has raised a total of more than 2.7 billion pounds. Earlier in 2021, SSE sold its home energy business to OVO for 500 million pounds. In 2020, it agreed to divest its energy shares from waste assets at a price of £1 billion. The company plans to use the proceeds of the disposal plan to reduce its debt of 8.9 billion pounds and support its capital investment plan.

Gregor Alexander, Chief Financial Officer of the Shanghai Stock Exchange, said: “SGN has been a very successful investment for the Shanghai Stock Exchange over the past 16 years. Play a key role in development. However, as we focus more on the core of low-carbon power, this has become a pure financial investment by the SSE, so now is the right time for the SSE to continue to flourish under the new ownership."

Keywords: new energy, overseas engineering, international engineering news

Morgan Stanley and Credit Suisse acted as financial advisors to the Shanghai Stock Exchange in the transaction, and CMS Cameron McKenna Nabarro Olswang acted as legal advisors. According to certain regulatory approvals, the transaction is expected to be completed within 2021.Editor/Baohongying