A deal for the National Grid’s £14bn-valued gas network is due to be sealed on Friday after being rubber-stamped by Prime Minister Theresa May as her stance on foreign takeovers starts to take shape.
The takeover, by a consortium involving China’s CIC Capital, the Qatar Investment Authority and Australian investment bank Macquarie, was seen as a major testing ground for May’s government and its attitude towards foreign investment.
The deal, for a 61 per cent stake in the gas distribution network, is completing weeks before the government is due to set out its long-awaited proposals for a foreign takeover regime, including a national interest clause.
The Department of Business, Energy and Industrial Strategy (BEIS) is due to set out its takeover proposals in a green paper in the coming weeks.
City A.M. understands the consultation may include a proposal that foreign bidders for stakes over a certain size in critical national infrastructure assets should be subject to government scrutiny.
After a debate between the Treasury and BEIS, one option on the table is that any deal which involves more than 25 per cent of a UK critical national infrastructure company being bought by an overseas firm should be scrutinised. Sources say business secretary Greg Clark originally advocated 15 per cent.
In a move seen as reassuring by dealmakers, May met with representatives from the Grid consortium this week, which also included Germany’s Allianz and, from the UK, Amber Infrastructure, Dalmore Capital and Hermes Investment Management, earlier this week.
She gave the deal, which involves some of the UK’s biggest foreign investors, her seal of approval, and even posed for photographs with them at the Qatar-UK Business and Investment Forum in Birmingham.
Amber chief executive Giles Frost, who sent a representative to the meeting and has worked alongside several other big foreign investors on other projects such as the Thames Tideway Tunnel, told City A.M. yesterday:
I think that Theresa May has been very, very clear that she wants the right sort of public investment into this country.” Asked whether he believes May’s regime will be less open to foreign deals than the previous administration, he added: “I don’t think the fundamental ethos will change.
City figures stressed businesses and investors are desperate for some certainty with regard to the national interest test. One top dealmaker said: “It would be an odd time for the government to put a barrier up when it is trying to negotiate free trade deals.”
Dan Lewis, senior infrastructure adviser at the Institute of Directors, told City A.M.: “The government needs to ensure a sensible balance between protecting critical national infrastructure and the need to fund much-needed infrastructure to support our economy and our businesses.”