National Grid agrees sale of last Quadgas stake for £1.2bn

National Grid said it had agreed to sell its 25% stake in distributor Cadent Gas to the Quadgas consortium for £1.2bn.

The potential sale is at the option of National Grid or Quadgas to complete at any time between 1 March 2019 and 31 October 2019, subject to at least six months notice, the company said in a statement.

“If the sale is completed for this 25% interest, as well as for the 14% option announced in March 2017, the proceeds for both transactions are expected to be retained for reinvestment in the business,” National Grid said.

The potential sale will allow National Grid to continue to rebalance its business towards a portfolio that delivers attractive asset growth of between 5% - 7%, the company said.

Quadgas is made up of International Public Partnerships (IPP), the Qatar Investment Authority and Macquarie Infrastructure. The deal is part of two put and call options allowing the consortium to buy 100% of Cadent.

In a separate statement , IPP said it would hold a 7.25% stake in Cadent after the deal, giving it the permanent right to appoint a board director.

"The company's third and final investment commitment is expected to be between £35m-£40m investment and, as with the previous option entered in March last year, will be exercisable in 2019," IPP said.

"The pricing for this further acquisition has not been disclosed on account of there being a number of factors feeding into the final price but the company confirms that this further investment is forecast to be accretive... in terms of discount rate, yield contribution and inflation indexation."