SSE has sold its stake in the business that runs the gas network in Scotland in a £1.2 billion deal that will give it more firepower to invest in renewable electricity.
The Perth-based energy giant has agreed to sell its 33.33 per cent stake in Scotia Gas Networks to investors based in Canada as part of a programme to offload non-core assets.
The company expects to achieve better returns from investing in the development of renewable electricity generating assets such as windfarms and related infrastructure.
Finance director Gregor Alexander said SGN is a strong business and will have a key role to play in the future development of the hydrogen economy.
SGN channels gas to six million homes in Scotland and southern England.
However, Mr Alexander added: “It has become purely a financial investment for SSE as we have sharpened our focus on our low-carbon electricity core, and it is therefore the right time for SGN to continue to thrive under new ownership.
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“We see significant growth opportunities in our core networks and renewables businesses in the transition to net zero and the capital we are releasing through our disposals programme will help enable us to maximise the delivery of our low-carbon electricity orientated strategy.”
The deal puts CCE on course to raise £2.7bn from a disposal programme that was expected to net £2bn.
The company has made clear that it expects to be able to find plenty of opportunities to invest the money raised from the programme in suitable projects both in the UK and overseas.
SSE is building the giant Dogger Bank windfarm off the Yorkshire coast, the Seagreen windfarm off Angus and the Viking onshore development in Shetland.
The company bid for acreage in the landmark ScotWind round with Japanese industrial giant Marubeni and Copenhagen Inftastrcucture Partners. Chief executive Alistair Philips-Davies has noted the company sees potential to develop floating windfarms.
SSE has teamed up with Spain’s Acciona Energia to work on windfarm opportunities off Iberia and Poland.
READ MORE: SSE plans move into Polish market with Spanish firm
Mr Alexander said SGN had been a hugely successful investment for SSE over the past 16 years. The company acquired a 50% equity share in SGN in 2005 for £505m. It sold a 16.7% stake to an Abu Dhabi sovereign wealth fund for £621m in 2016.
While SSE sees better prospects in electricity, the latest SGN deal provides further evidence that overseas investors see potential in gas assets in the UK.
The consortium that has agreed to acquire SSE’s stake in SGN is also buying the interest held by the Abu Dhabi Investment Authority.
The consortium includes the Ontario Teachers’ Pension Plan Board which already has a 25% interest in SGN. It is increasing its holding to 37.5%.
The other consortium member, Brookfield Super-Core Infrastructure Partners, will acquire a 37.5% interest in SGB.
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The business is run by Canadian asset management firm Brookfield whose board members include former Bank of England Governor Mark Carney.
In its annual results announcement in May SSE said the programme of non-core asset sales announced in June last year had delivered £877.6m of exceptional net gains and over £1.4bn of cash proceeds by March 31.
In October last year, the group sold interests in waste to power plants at Ferrybridge in Yorkshire to an infrastructure investment fund for £995m.
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The preceding month the group sold its non-operated stake in the Walney offshore windfarm to Greencoat UK Wind for £350m and its interest in the MapleCo smart meter business to funds managed by Equitix for £95m.
In December SSE agreed to sell its North Sea gas production business to Viaro Energy for £120m.
In January last year, before launching the £2bn programme, SSE sold its British household supply arm to Ovo for £500m.
SSE shares closed up 18.5p, at 1464p.
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