The Courier & Advertiser (Fife Edition)
Abu Dhabi wealthfund takes £621m stake in SGN
ENERGY: Perth utility SSE agrees sale of part of its stake in major UK gas distributor
Perth power provider SSE has sold a minority stake in gas distribution firm SGN to the Abu Dhabi Investment Authority (ADIA)for £621 million.
The Gulf State-based sovereign wealth fund is expected to tie-up the purchase of a 16.7% stake in SGN by the end of this month.
SSE will retain a 33.3% interest in SGN, which owns and operates two gas distribution networks serving six million properties in Scotland and the south of England, following the sale.
The Inveralmond-based utility has been involved with SGN since 2005 when it acquired a 50% stake in the business for £505m.
SGN has since become a leading gas distribution business with a regulated asset value of more than £5 billion.
SSE said it had provided “fair returns” for its investors and, in total, the power group has received dividend payments and other distributions of £750m in the 11 years it has held an interest in the gas distributor.
In May, SSE said it was considering a sale of up to one third of its overall stake in SGN as it looked to “crystallise some value for shareholders” from its longterm investment in the business.
It said yesterday that it would set out it intentions for the proceeds of the sale to ADIA at the time of its interim results announcement next month.
Following completion of the sale, SSE will have an ownership interest in five economically-regulated energy networks with a total asset value of over £7bn.
It expects that figure to rise to £8.5bn by March due to the impact of continuing investment plans.
SSE chief executive Alistair PhillipsDavies said he was pleased a sale had been agreed.
“Over the last decade, SGN has become a leading gas distribution business for the benefit of customers and investors alike,” Mr Phillips-Davies said.
“The sale of a 16.7% 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.”
The ADIA’s 2015 review document states its mission is to “sustain the longterm prosperity of Abu Dhabi by prudently growing capital through a disciplined investment process”.
The fund was created by the Government of Abu Dhabi in 1976 and it still provides funds for investment but ADIA operates entirely independently from the state. It is heavily diversified with funds allocated across more than 20 asset classes and sub-categories.
The group is heavily invested in North America and Europe and is growing its presence in Asia and emerging markets such as South America.
In the 2015 review, managing director Hamed bin Zayed Al Nahyan said ADIA invested for the long term.
He said: “Against a backdrop of slowing global growth, ADIA’s investment strategy will remain focused on identifying long-term trends and patiently growing capital.”