SSE and ADIA Sell Ownership Stakes in Scotia Gas Networks

Posted on 08/02/2021

Ontario Teachers Pension Plan Board (Ontario Teachers’) announced that it is participating in a consortium with Brookfield Super-Core Infrastructure Partners (Brookfield) which has agreed to acquire a 50% stake in Scotia Gas Networks Ltd (SGN). As part of the transaction, Ontario Teachers’, an existing SGN shareholder, will acquire an additional 12.5% in SGN and Brookfield will acquire a 37.5% stake in SGN. StepStone clients are participating in both the Brookfield and Ontario Teachers’ investments.

The consortium is acquiring the 33.3% stake in SGN owned by SSE and the 16.7% stake owned by the Abu Dhabi Investment Authority (ADIA).

SSE’s 33.3% sold stake is a transaction based on an effective economic date of March 31, 2021 and is for a consideration of £1,225 million in cash.

Following the close of the transaction, SGN’s direct shareholders will comprise Ontario Teachers’ (37.5%), Brookfield (37.5%), and OMERS Infrastructure (25%).

SGN is the second largest UK gas distribution network in the U.K. and owns Scotland Gas Networks plc and Southern Gas Networks plc, two of the eight regulated gas distribution networks in England, Wales and Scotland, operating under a license from Ofgem to distribute gas through their infrastructure network. SGN is attempting at pioneering the repurposing of existing gas networks into renewable hydrogen energy systems. SGN has committed to achieve a net zero climate impact by 2045.

SSE initially acquired a 50% equity share in SGN in 2005 for a total of £505m, before selling a 16.7% stake to a wholly owned subsidiary of the Abu Dhabi Investment Authority in 2016.

Morgan Stanley and Credit Suisse acted as financial advisers and CMS Cameron McKenna Nabarro Olswang LLP as legal advisers to SSE. Nomura acted as financial adviser and Freshfields Bruckhaus Deringer LLP acted as legal advisers to ADIA. Evercore acted as financial adviser to Ontario Teachers’ and Linklaters acted as legal advisers to the Consortium.

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