Canadian fund sells 25% Scotia Gas stake to GIP

Canadian pension fund Omers Infrastructure announced it agreed to sell a 25% interest in Scotia Gas Networks (SGN) to Global Infrastructure Partners (GIP).

SGN’s other shareholders are Ontario Teachers’ Pension Plan Board with 37.5% and Brookfield Super-Core Infrastructure Partners with 37.5%.

SSE sold its entire 33.3% stake in SGN for £1.2 billion to a consortium comprising the Ontario Teachers’ Pension and Brookfield Super-Core.

SGN is the second largest gas distribution network in the UK, operating Scotland Gas Networks plc and Southern Gas Networks plc, two of eight regulated gas distribution networks in England, Wales and Scotland, under a license from Ofgem to distribute gas through their infrastructure network.

GIP said SGN has a “regulated asset value” of £6 billion and an annual turnover of over £1.2 billion.

SGN serves nearly six million homes and businesses. It has 3,900 employees and its regulated gas networks consist of 76,000km of gas mains and services.

The SGN network in Scotland distributes natural and green gas to 75% of households, including remote areas through the Scottish Independent Undertakings (SIUs).

In southern England, SGN’s network stretches from Milton Keynes at the top end, to Dover in the south east and Lyme Regis in the south west, including all of south London, overall distributing gas to around 90% of households.

“SGN was our first infrastructure investment in Europe, and we are very pleased with the company’s seventeen-year track record of successful value creation for both customers and investors,” said Alastair Hall, Head of Europe for Omers Infrastructure.

“We first invested in SGN at its creation in 2005, and it is now the UK’s leading gas distribution company across key operational and customer metrics.

“Over this period, we have supported significant regulated capital investment programmes, the development of several commercial businesses, and SGN’s preparations for the transition to hydrogen including the H100 project in Fife …

“Our work alongside our partners and the SGN management team over such a sustained period is a strong example of our active asset management approach.

“We will redeploy the capital back into growing our C$30 billion direct global infrastructure portfolio. We wish the company and its new investors well.”

Adebayo Ogunlesi, chairman and managing partner of GIP, said: “GIP has deep experience and a strong track record of investing in and driving value from core utilities and natural gas infrastructure.

“We regard SGN as the premier gas DNO in the UK and a key player in the energy transition.

“The conversion of gas distribution networks into hydrogen ready infrastructure represents a unique opportunity to significantly grow the company while supporting the UK’s net zero goals through the adoption of green hydrogen.

“We look forward to working with management and the company’s other shareholders to help deliver on these growth ambitions and support its net zero strategy.”

SGN CEO John Morea said: “SGN has a pioneering role in shaping the UK’s energy future, so GIP’s investment is good news and we look forward to working with GIP as part of the SGN Board.

“We would like to thank Omers for a successful and productive relationship during the past 17 years.

“As the start of a new year approaches, we remain fully committed to advancing a range of innovative projects that will place hydrogen and other green gases at the heart of the UK’s energy transition.

“The UK’s gas networks are key to meeting ambitious net zero goals and we look forward to being part of the solution as we continue to provide excellent service for our customers.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.