Energy firm SSE has agreed the sale of a stake in its gas distribution business, Scotia Gas Networks (SGN), to the Abu Dhabi Investment Authority (ADIA) for £621m.
The sale follows a review announced by SSE in May - the energy group said at the time that if a sale was completed, the proceeds would be used to return value to shareholders or "to invest to create value for shareholders, should there be the right opportunity".
SSE acquired a 50 per cent equity stake in SGN in 2005 for a total of £505m and will retain a 33.3 per cent stake in SGN after the ADIA deal completes. SGN owns and operates two networks which distribute gas to almost six million properties in Scotland and the south of England. SSE said today that it "believes that SGN is in a good position to build on its track record of success in the future".
Shares in the company dipped by one per cent in early trading.
"Over the last decade, SGN has become a leading gas distribution business for the benefit of customers and investors alike," said SSE chief executive Alistair Phillips-Davies.
"The sale of a 16.7 per cent stake confirms SSE's ability to deliver value for shareholders through focused, timely disposals while at the same time retaining a diverse range of regulated and unregulated businesses in order to support long term dividend growth. We look forward to working with all of SGN's shareholders to support the continued success of the business in meeting the needs of customers and earning a return for investors."
SSE has recently struggled to keep its profits up due to what it's described as "intense" competition. Earlier this year, the energy group sold a stake in one of its wind farms for £355m.