International consortium pipes up with offer for National Grid's £11bn-valued gas network in time for final bids deadline

William Turvill
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National Grid kicked off the sale process of the majority stake in its gas distribution network in November last year (Source: Getty)

An international consortium today tabled an offer for a majority stake in the National Grid’s £11bn-plus-valued gas distribution network, with the final bidding round now closed.

The Grid is aiming to agree a deal for the 51 per cent stake before Christmas and wants to complete the sale in the first quarter of next year.

City A.M. can reveal a consortium involving the China Investment Corporation (CIC), Australian investment bank Macquarie and UK-based Hermes Investment Management tabled a bid in time for today’s deadline.

A number of other Chinese companies have been involved in the bidding process, which National Grid kicked off in November last year, and the deal could provide a test for Theresa May, whose government has spoken of the importance of foreign takeovers being in the “national interest”.

Read more: Hermes joins China's sovereign wealth fund in National Grid bid

Hermes joined the CIC and Macquarie consortium late on, at the end of October, with the UK investment company’s involvement seen as a move to increase British involvement in a deal that could arouse government scrutiny. The group also includes Germany’s Allianz and UK-based fund managers Dalmore Capital and Amber Infrastructure.

Other Chinese firms, including Fosun, China Resources Gas and Cheung Kong Infrastructure (CKI) have been involved in the bidding process.

National Grid announced the potential sale of its majority stake in its UK gas distribution business, which has been valued at £11bn or more.

The company said in its half-year results earlier this month that the sale is “on track” and expected to complete early in 2017.

If a Chinese or other foreign bidder is successful in the process, the deal could come under government scrutiny.

Read more: Ofgem warns bidders National Grid gas business earnings are not guaranteed

Both Prime Minister May and chancellor Philip Hammond have spoken about the importance of takeovers being in the “national interest”.

And, after the government gave its approval to the Hinkley Point project, the Department for Business, Energy and Industrial Strategy (BEIS) said it was developing a “new legal framework for future foreign investment in British critical infrastructure”.

This is not in place, but City A.M. understands people working on the deal are aware that it could receive a degree of government attention.

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