National Grid to Sell Cadent Stake for 1.2 Billion Pounds

National Grid Plc agreed to sell its remaining 25 percent stake in the U.K.’s biggest gas distribution business to focus on assets that deliver higher growth.

The U.K. network manager signed an accord with a company controlled by a consortium of Macquarie Bank Ltd. and Allianz Capital Partners, as well as other infrastructure funds, that gives the option to complete between March and October next year, National Grid said in a statement. The consortium bought 61 percent of the distribution business last year, when another option for 14 percent was also agreed.

Cadent Gas Ltd. includes four regional gas networks, serving about 11 million customers through 130,000 kilometers (81,000 miles) of pipelines. British utility assets have historically attracted foreign companies that favor steady income generation, such as pension funds and other asset managers.

“National Grid has long said this segment is growing more slowly than the rest of the group,” RBC Europe Ltd. said in a note to clients. “And despite being a cash contributor to the group, there are better opportunities elsewhere to deploy capital.”

The cash proceeds from the potential sale to Quadgas Investments Bidco Ltd., excluding dividends received up to 31 March 2019 and certain other adjustments, would be about 1.2 billion pounds ($1.65 billion).