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Bond Market News
Macquarie to Buy Controlling Stake of £4.2bn in Britain’s National Grid’s Gas Network
March 28, 2022
Australia’s Macquarie Group in a consortium with British Columbia Investment, has agreed to buy a controlling stake of 60% for £4.2bn ($5.5bn) in Britain’s National Grid’s gas network. The company also has on option to buy the remaining 40%. The company will take over National Grid’s gas transmission and metering business which has a network of 7660 km of pipes, transporting gas to heat homes, to the power industry and for electricity generation in the UK. The deal implies an enterprise value of £9.6bn ($12.7bn), or 1.26x the asset price set by regulator Ofgem. Of the total enterprise value, net debt accounts for £3.8bn ($5bn). National Grid will receive about £2.2bn ($2.9bn) in cash and £2bn ($2.6bn) from additional debt financing once the deal gets through. The UK has a net-zero target by 2050 and Macquarie expects its investment will ensure the transmission system will play a key role in achieving the target by supporting hydrogen’s role in the energy mix.
Macquarie Group’s dollar bonds were slightly higher – its 1.57% 2024 were up 0.05 points to 100.72 and yielding 0.88%.
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