Hanwha Life, scientist fund to put $230 mn into UK gas business bid

  • 2016-11-29

South Korea’s Hanwha Life Insurance Co. Ltd. and a scientists’ savings fund will commit a total of 185 million pounds ($230 million) to a project fund being raised by British infrastructure investor, Dalmore Capital Limted, to finance a joint bid for a U.K. gas distribution network, a source with direct knowledge on the matter said on Nov. 25.

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Hanwha Life and the Korea Scientists and Engineers Mutual-aid Association will contribute 155 million pounds and 30 million pounds to the fund, respectively. A near-monopoly position of the gas distribution business and expectations for steady cash flows fanned interest in the utility asset.

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The project fund is a part of a consortium including Australian investment bank Macquarie Group Ltd. and China Investment Corporation (CIC), a sovereign wealth fund, formed to bid for a controlling stake in gas distribution networks of National Grid Plc, the U.K.’s electricity and natural gas network operator.

National Grid has begun the sale process for a 51% stake in its gas distribution business which serve 11 million customers in six cities in the United Kingdom, including London, Manchester and Birmingham. The U.K. utility company’s gas business is reportedly worth about 11 billion pounds as a whole.

The consortium led by Macquarie is known to have raised about 2 billion pounds to prepare for the auction which is set to be one of the largest infrastructure deals in the U.K. in recent years. The Macquarie-led group is competing with another group of investors spearheaded by Fosun International Ltd., a Shanghai-based investment firm led by chairman Guo Guangchang, known as the Warren Buffett of China. The bidding groups have been selected as potential bidders for final-round bids due by Nov. 28.

“Given the growing hostility to Chinese private capital in Britain, the Macquarie-led consortium appears to stand a good chance of winning,” the source told the Korea Economic Daily.

It is known that the consortium of Macquarie, CIC and Dalmore Capital, has expressed an intention that if it wins the auction, they will replace the existing, old metal gas pipelines with strengthened plastics.

Morgan Stanley, Barclays and Robey Warshaw are advising National Grid. In South Korea, Mirae Asset Global Investments Co. Ltd. arranged the investment in the Dalmore’s project fund.

By Daehun Kim and Chang Jae Yoo

daepun@hankyung.com

<Edited by Yeonhee Kim>