Macquarie-led consortium acquires further 20% of UK gas transmission company

A CONSORTIUM led by Macquarie Asset Management (MAM) is acquiring a further 20% in National Gas, which operates the UK’s 7,600 km gas transmission system, increasing the consortium’s ownership to 80% after an initial acquisition completed earlier this year.

The consortium announced in January that it had completed the acquisition of 60% of National Gas from utility company National Grid, in a deal worth £4.2bn (US$5.4bn). National Gas became an independent company once the deal was completed.

According to The Financial Times, the consortium, which includes Canadian institutional investor British Colombia Investment Management Corporation, bought the additional 20% stake for £700m.

Martin Bradley, European head of infrastructure for MAM, said the additional investment underlines the company’s commitment to National Gas and the critical role it plays in the UK’s energy system. He added that MAM plans to acquire that remaining interest.

The consortium will have the option to buy part or all of the remaining interest in National Gas between 1 May 2024 and 21 July 2024. If it only buys a portion during that time, National Grid has the right to offer it any remaining interest in December 2024.

National Gas operates the UK’s 7,600 km national transmission system, transporting the gas needed to heat homes and power industry and electricity generation. It also provides maintenance and management services to more than 7m domestic, industrial, and commercial gas meters across the UK.

Portfolio shifts

National Gas expects hydrogen to play a significant role in UK decarbonisation of heat, power generation, and transport. MAM says that since it acquired the gas transmission company, it has secured initial funding to develop a national hydrogen backbone network.

Through Project Union, National Gas is working to deliver a “first of its kind” hydrogen transmission backbone network. It will repurpose existing assets alongside developing new ones to create about 2,000 km of hydrogen transport pipelines.

Despite National Gas’s investment in future hydrogen, uncertainty remains around the role it will play as well as market impacts. The potential use of hydrogen in heating homes suffered a setback last month, when it was announced that Whitby in Cheshire would no longer be considered as the location of the UK’s first hydrogen village trial due to strong local opposition.  

National Grid, meanwhile, is focusing on electricity as it seeks to help the UK achieve its net zero ambitions. In 2021, National Grid announced several deals to reposition its portfolio, including the £7.8bn purchase of Western Power Distribution, the UK’s largest electricity distribution network operator.

Now called National Grid Electricity Distribution and operating as a distribution division, it delivers power to millions of homes and businesses across the East and West Midlands, South West, and Wales. The division has a distribution area of 550,000 km².