Quad Gas Group, a consortium of long-term infrastructure investors, today announces that it has entered into an agreement with National Grid plc to acquire a 61 percent shareholding in its four regulated gas distribution networks.
These gas distribution networks cover the East of England, North London, North West and West Midlands, and distribute gas to approximately half of the country’s connected households through 130,000 km of gas pipeline. They represent approximately 14 percent of the total regulated energy infrastructure sector in Great Britain by regulated asset value and are regulated by Ofgem.
The consortium is made up of Macquarie Infrastructure and Real Assets (MIRA), CIC Capital Corporation, which is a wholly owned subsidiary of China Investment Corporation, Allianz Capital Partners, Hermes Investment Management, Qatar Investment Authority, Amber Infrastructure and Dalmore Capital.
The transaction is expected to complete in Q1 2017 following regulatory approval. The vendor, National Grid plc, an international electricity and gas company headquartered in the UK, will retain a 39 percent stake in National Grid Gas Distribution.
National Grid plc also announced today that they and the Consortium have expressed an interest in relation to the potential future sale and purchase of an additional 14 percent stake, on broadly equivalent financial terms to the Transaction. Further details will be announced if agreement is reached.
Martin Stanley, Global Head of MIRA, said: “This is a well-established business and we are confident that we as investors can continue to provide both high quality infrastructure for the UK and appropriate risk-adjusted returns for investors. MIRA has long standing operational experience in managing utilities and critical infrastructure in the UK, across Europe and around the world and we are committed to being a long term investor in and a responsible custodian of National Grid Gas Distribution”
Christian Fingerle, Chief Investment Officer, Allianz Capital Partners, said: “This business provides essential services to 11 million customers in the UK and we are committed to its sustainable development in the long term. The well-established regulatory framework and stable and predictable nature of the business make it an excellent fit with Allianz strategy of investing in core infrastructure assets on behalf of our millions of clients.”
Peter Hofbauer, Head of Infrastructure, Hermes Investment Management said: “National Grid’s Gas Distribution Networks are strategic UK Infrastructure assets and are an excellent fit within our core investment strategy, which targets infrastructure businesses that deliver long-term predictable inflation-linked cash flows, with robust cash yield. We look forward to supporting the business in making its important contribution to the U.K. economy alongside our consortium partners and National Grid.”
Gavin Tait, Investment Director, Amber Infrastructure added: “National Grid’s gas distribution business forms a core and essential part of the UK’s infrastructure base. The longstanding and transparent regulatory regime, combined with the assets' inflation linkage make the risk-adjusted returns attractive to the investors we advise.”
Alistair Ray, Partner and Chief Investment Officer, Dalmore Capital said: “We are all experienced, long term investors in the UK’s critical infrastructure with a track record of delivering reliable services and operational outperformance. This is an attractive opportunity for our investors and is fully aligned with Dalmore’s investment strategy.”
Macquarie Capital and RBC Capital Markets acted as financial advisers to Quad Gas Group.
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Notes to Editors:
About Quad Investments
The consortium is made up of Allianz Capital Partners, Amber Infrastructure, CIC Capital Corporation, Dalmore Capital, Hermes Investment Management, Macquarie Infrastructure and Real Assets (MIRA), and Qatar Investment Authority. Following acquisition, the business will have the following ownership structure:
| National Grid | 39.0% |
|---|---|
| Quad Gas Group | |
| MIRA | 14.5% |
| CIC Capital | 10.5% |
| ACP | 10.2% |
| Hermes | 8.5% |
| QIA | 8.5% |
| Amber/INPP | 4.4% |
| Dalmore Capital | 4.4% |
| Total | 100% |
The Consortium consists of long term investors in the UK’s critical infrastructure with a track record of delivering reliable services and operational outperformance in regulated industries – they have proven operational excellence, as well as financial scale.
Individually they have invested in a multitude of global projects in the regulated asset environment, including numerous gas assets such as Open Grid Europe, Gassled and NET4GAS, Czech Gas Networks, Thyssengas, Wales & West Utilities, and have a successful track record of investing in the UK’s largest critical infrastructure investments, including Tideway Tunnel, Heathrow, Thames Water and Porterbrook.
About the Gas Distribution Networks:
National Grid has agreed a sale of a 61% shareholding in its gas distribution network which consists of four of the eight UK regional GDN companies which deliver gas from the high pressure transmission network (also owned by National Grid) across the East of England, North London, the North West and the West Midlands. The four GDNs, the subject of this transaction, distribute gas to approximately half of the country’s connected households serving 11 million customers across a network of 130,000 km of gas pipeline. GDNs are regulated by Ofgem, the UK’s gas and electricity regulator.
About Macquarie Infrastructure and Real Assets:
Macquarie Infrastructure and Real Assets (‘MIRA’), a division of the Macquarie group of companies, is the world’s largest infrastructure manager with over £70 billion in infrastructure assets under management across 27 countries and c.400 employees globally. In total MIRA has circa 115 infrastructure assets including more than 40 utilities and energy related companies under management through a range of listed and unlisted vehicles globally.
About CIC Capital Corporation:
CIC Capital Corporation, a wholly-owned direct subsidiary of China Investment Corporation (CIC), was incorporated in January 2015 with a mandate to specialise in making direct investments to refine CIC's overall portfolio management and enhance investment on long-term assets. As CIC's direct investment arm, CIC Capital is mandated to make direct investments and manage bilateral, multilateral and platform fund investments to maximize returns and promote international investment cooperation. CIC Capital is a market-oriented commercial entity with a global reach.
About Allianz:
Allianz represents one of the world’s strongest financial communities, offering a broad range of insurance and asset management services. In 2015, Allianz employed around 142,000 staff in some 70 countries and achieved total revenues of 125.2 billion euros and an operating profit of 10.7 billion euros. Allianz Group managed an investment portfolio of around 640 billion euros. Additionally our asset managers Allianz GI and PIMCO managed 1.3 trillion euros of third party money. Allianz is active in a wide variety of sectors including real estate, infrastructure, renewable energy and equity and debt. Allianz’s long-term value strategies maximize risk-adjusted returns.
Allianz Capital Partners is the Allianz Group's in-house investment manager for alternative investments. With offices in Munich, London, New York and Singapore Allianz Capital Partners manages more than EUR 16 billion of alternative assets. The investment focus is on infrastructure, renewables as well as private equity funds. ACP’s investment strategy is targeted to generate attractive, long-term and stable returns while diversifying the overall investment portfolio for the Allianz Group insurance companies.
Allianz was part of the consortium investing alongside INPP in the Tideway Tunnel project.
About Hermes Investment Management:
Hermes is focused on delivering superior, sustainable, risk adjusted returns for our clients – responsibly. Our goal is to help people invest better, retire better and create a better society for all.
Hermes manages assets on behalf of more than 330 clients* across equities, fixed income, alternatives and real estate, with £28.6 billion* assets under management. In Hermes EOS, we have the industry’s leading engagement resource, advising on £237 billion* of assets.
*Please note the total AUM figure includes £5.4bn of assets managed or under an advisory agreement by Hermes GPE LLP (“HGPE”), a joint venture between Hermes Fund Managers Limited (“HFM”) and GPE Partner Limited. HGPE is an independent entity and not part of the Hermes group. £0.2bn of total group AUM figure represents HFM mandates under advice. Source: Hermes as at 30 September 2016.
About Qatar Investment Authority:
Qatar Investment Authority (“QIA”) is the sovereign wealth fund of the State of Qatar. QIA was founded in 2005 to strengthen the country's economy by diversifying into new asset classes. Building on the heritage of Qatar investments dating back more than three decades, its growing portfolio of long-term investments help complement the state's huge wealth in natural resources.
Headquartered in Doha, and with a subsidiary in New York (QIA Advisory), QIA is structured to operate at the very highest levels of global investing. As a world class investor, QIA adheres to the strictest financial and commercial disciplines. It has a strong track record of investing in infrastructure and in the UK as well as in different asset classes, including listed securities, property, alternative assets and private equity in all the major capital markets as well as the newer emerging markets.
About Amber Infrastructure Group:
Amber is a leading international infrastructure specialist, providing asset management and investment advisory services in respect of over £6 billion of assets in the UK, Europe, Australia and North America. Amber’s core business focuses on sourcing, developing, advising on, investing in and managing infrastructure assets within the utilities, PPP, transport, renewable energy and regeneration sectors.
Amber provides investment advisory services to International Public Partnerships Limited as well as private investment funds, specialising in urban regeneration. Amber is headquartered in London with offices in Munich, Sydney, Melbourne and San Francisco and employs over 90 people, making it one of the largest international infrastructure specialists.
About International Public Partnerships:
International Public Partnerships (‘INPP’) is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships (‘PPP’), private finance initiative (‘PFI’), regulated asset and other similar procurement methods.
Listed in 2006, INPP is a long-term investor in 126 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and utility and transmission projects in the UK, Europe, Australia and North America. INPP seeks to provide its shareholders with both a long-term yield and capital growth through investment across both construction and operational phases typically of 25-40 year concessions.
Amber Infrastructure Group (‘Amber’) is the Investment Advisor to INPP and has around 90 dedicated staff who manage, advise on and originate projects for INPP.
About Dalmore Capital Limited:
Dalmore Capital Limited (Dalmore) is an independent UK fund manager currently managing over £2.0bn for institutional investors across eleven investment vehicles including discretionary-managed funds, co-investment accounts and single account mandates. Dalmore has offices in London and Edinburgh and invests in lower risk UK infrastructure, in both greenfield and brownfield assets.
In 2014, Dalmore was appointed as discretionary manager for the Pensions Infrastructure Platform, a £535m fund established for long-term investment in operational UK infrastructure assets, targeting yielding assets with inflation-linked returns.
For the Tideway Tunnel project, Dalmore established a single purpose fund which secured £440m of commitments, primarily from leading UK pension funds, to fund its investment and will establish a similar single-purpose fund for the purpose of investing in the GDNs.