Two Chinese consortiums are reportedly bidding to acquire a controlling 51% stake in National Grid's UK gas distribution business. While one is said to be led by Li Ka Shing, Hong Kong's richest man, the other group is said to include Chinese industrial conglomerate Fosun and natural gas distribution company, China Gas.
National Grid is a British electricity and gas utility company whose principal activities are in the UK and Northeastern US. It is calling bids for its gas supply business, which distributes gas to 11 billion homes and businesses in the UK. According to analysts, this business could be valued at between £10bn ($13.04bn) and £11bn including debt.
Li Ka Shing is expected to participate in the auction through his publicly listed infrastructure company, Cheung Kong Infrastructure Holdings (CKI). This Hong Kong-based company already holds diversified investments in energy infrastructure, transportation Infrastructure and other infra-related businesses. CKI also owns stake in many British companies including an electricity distribution network that was earlier owned by UK energy company EDF.
This stake sale is set to be one of the largest infrastructure deals in the UK in recent times. It follows Theresa May's government approving the £18bn Hinkley Point C nuclear power project last week. One of the owners of this nuclear project is a Chinese state-owned company.
While CKI is yet to respond to this news, preliminary bids for this National Grid business are expected to be submitted today (23 September). Apart from these two companies, bidders from Europe, Australia, the Middle East and North America are said to be participating.
According to the Financial Times, other consortiums that are participating in the auction include one that is led by Canada Pension Plan Investment Board, which includes sovereign wealth funds from Kuwait and Abu Dhabi. One group is said to be led by investment bank Macquarie. This group reportedly includes German insurer Allianz, independent fund management company, Dalmore Capital and China's sovereign wealth fund, China Investment Corporation.