Macquarie, world’s biggest infrastructure investor, will take control of Britain’s main gas transmission network, in a deal worth approximately PS700 million.
This decision shows the Australian bank’s faith in the future of the gas pipelines, despite the UK’s continued shift to renewable energy sources.
Macquarie Acquisition Details and Background
Macquarie exercised its right to purchase the remaining 20% stake in National Gas which owns the 7,660 km network from National Grid. This company is listed on FTSE 100.
Macquarie has made previous acquisitions, including a 60 percent share acquired in 2022 for PS4.2 billion, along with its consortium partner British Columbia Investment Management Corporation and a 20 percent additional stake last year.
Macquarie now has full control over National Gas. This is a strategic move for the UK energy infrastructure. This transaction should be completed in the first quarter 2025.
UK Infrastructure Changes: Strategic Timing
This acquisition is made at a crucial time for UK infrastructure. The new Labour Government is encouraging asset managers and pension funds, in order to improve the resilience and development of the UK’s infrastructure to invest more.
Macquarie’s investment reveals a different view of the future of energy. Despite the UK’s wider energy strategy, which aims to phase out the natural gas that supplied 38 percent of its energy in 2022 in favor of reducing CO2 emissions in order to reach net-zero by 2050.
Bet on hydrogen for the future of gas pipes
Macquarie appears to be betting that hydrogen will play a larger role in the future energy. National Gas has developed plans to
Adapt its network to carry only hydrogen and not natural gas.
The move is considered forward-looking, given the potential for hydrogen to replace fossils fuels in heavy industries and transportation sectors.
Colm Gibson, Berkeley Research Group’s managing director of regulated asset, commented on the strategy.
Macquarie may be betting on the fact the transition timeline is not clear and could take longer than expected.
The National Infrastructure Commission (NIC), which advises UK government, is in favor of hydrogen’s role in the industrial sector. It also stresses the importance of core networks for transmitting and storing hydrogen and carbon before 2035.
It has warned against using hydrogen as a home heating fuel, and raised questions about the future of gas distribution networks in residential areas.
Macquarie Infrastructure Portfolio
Macquarie’s investment in National Gas forms part of its extensive infrastructure portfolio.
The company owns a large stake in Cadent which operates the local gas distribution network for half of Britain.
Macquarie, along with another shareholder, sold a combined PS1.3bn in Cadent. Macquarie, however, will retain a 20% stake. This ensures that Macquarie has a continuing influence over the distribution system, which serves 11 million homes in England.
Macquarie controversy
Macquarie’s ownership in infrastructure assets is not without controversy. The company owned Thames Water, UK’s largest utility.
Thames Water’s debt grew significantly between 2006 and 2017, from PS3.4 billion up to PS10.8billion. This was accompanied by significant dividends and loans that have been criticized.
Macquarie has, however, defended their tenure by citing an investment of PS11bn in infrastructure, funded through customer bills.
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