The Government has launched an investigation into the overseas takeover of the UK’s main natural gas pipeline.
Ministers will review the sale of a 60 per cent stake in National Grid’s transmission business to a consortium spearheaded by Macquarie under new national security rules.
Downing Street is scrambling to secure energy supplies ahead of winter, amid mounting fears of supply shortages during the coldest months of the year when demand is at its peak.
The £4.2bn deal is one of the biggest acquisitions to be investigated under the National Security and Investment Act (NSIA).
This follows the UK’s biggest microchip plant, Newport Wafer Fab to Nexperia and French billionaire Patrick Drahi’s stake-building in BT being called in over the act.
The act came into force at the start of the year, driven by fears of key British companies falling into the wrong hands.
Under the NSIA, the Government must be notified about certain deals in 17 sensitive areas of the economy, including energy, defence, civil nuclear, transport and communications.
This is so that they can be more heavily scrutinised if needed.
The act expanded the number of deals the Government is able to assess on security grounds, compared to the Enterprise Act of 2002.
According to The Telegraph, the review was driven by the importance of the infrastructure rather than any specific concerns.
National Grid goes electric with bet on cars and heat pumps
National Grid’s gas transmission business owns and runs more than 7,000km of pipes transporting gas across the country.
It now wants to focus on its electricity networks business, forecasting huge growth in electric cars and heat pumps.
While it is keeping hold of a 40 per cent stake in the gas networks, it has an option to sell in future.
The FTSE 100 company agreed in March earlier this year to sell it to a consortium consisting of both Macquarie and British Columbia Investment Management Corporation.
National Grid revealed in published documents that it expects the deal to complete by the end of the year following the NSIA review.
Ministers have 30 working days to examine the deal, with the possibility of another 45-day extension.
Macquarie is one of the UK’s biggest infrastructure investors, splashing out more than £50bn into companies such as Southern Water, Arqiva and Glasgow and Southampton airports.
It was also the previous owner of Thames Water, where it was accused of failing to invest sufficiently in operations while extracting billions of pounds in dividends.
British Columbia Investment Management Corporation is one of Canada’s largest pension fund managers.
The National Grid confirmed the review and told City A.M. it was “nothing unexpected” and was “part of the process.”
A Government spokesperson said: “While commercial transactions are primarily a matter for the parties involved, the Government has powers under the National Security and Investment Act to monitor and intervene in acquisitions where necessary The UK’s secure and diverse energy supplies will ensure households, businesses and industry can be confident they can get the electricity and gas they need.
The story was first reported in The Sunday Telegraph.