Page 9 - Euroil Week 32 2021

EurOil INVESTMENT EurOil
SSE exits UK gas distribution
UK
SSE is shifting to low- carbon energy.
UK energy utility SSE announced early this month it was divesting its entire 33.3% in gas distributor Scotia Gas Networks (SGN) for GBP1.225bn ($1.7bn), in order to sharpen its focus on renewables and low-carbon power.
The buyer is a Canadian joint venture between Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Part- ners, which are also acquiring a 16.7% stake in SGN held by the Abu Dhabi Investment Authority (ADIA). Once both deals are closed, Ontario Teachers’ and Brookfield will each own 37.5%, with the remaining 25% held by OMERS Infrastructure.
SGN is a major player in UK gas supply, sup- plying 5.9mn homes and businesses in the south- east of England and Scotland. SSE entered the business in 2005 when it bought a 50% interest for GBP505mn, though it sold 16.7% to ADIA in 2016 for GBP621mn.
SSE’s exit brings an end to a divestment pro- gramme SSE launched in June 2020, originally expected to raise GBP2bn but which has in fact earned more than GBP2.7bn.
“SGN has been a hugely successful invest- ment for SSE during the past 16 years. It is a strong business delivering consistently for cus- tomers and will have a key role to play in the future development of the hydrogen economy,” SSE’s financial director, Gregor Alexander, said in a statement. “However, it has become purely
a financial investment for SSE as we have sharp- ened our focus on our low-carbon electricity core, and it is therefore the right time for SGN to continue to thrive under new ownership.”
This low-carbon core has made a number of new investment announcements. Comple- menting its portfolio of around 4 GW of onshore and offshore wind and renewable hydroelectric capacity, SSE also announced recently it wanted to develop 1.8-GW hydrogen-fired power plant in the UK’s Humber region in partnership with Norway’s Equinor. It is also drawing up plans for a 900-MW gas-fired power plant at Peterhead in Scotland that will capture its CO2 emissions for storage, and has proposed a hydrogen storage facility.
SSE said it would use the proceeds from the latest divestment to pay down its debts and fund capital investments. While existing gas distri- bution, it has said it will retain its gas storage business, which it sees as critical for the energy transition.
SSE hired Morgan Stanley and Credit Suisse as financial advisors and CMS Cameron McK- enna Nabarro Olswang as legal advisor for the transaction, while Evercore worked as financial advisor for Ontario Teachers’ and Linklaters as legal advisor to the two Canadian buyers. ADIA used Nomura as the financial advisor for its sale, and Freshfields Bruckhaus Deringer as its legal advisor. ™
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