Hong Kong tycoon Victor Li is closing in on a $27 billion sale of UK power assets to private investors
LONDON (BLOOMBERG) – A consortium led by Macquarie Group and KKR & Co is in advanced talks to buy the British electricity distribution company controlled by Hong Kong tycoon Victor Li, in what could be one of the industry’s biggest deals this year. as sources are known the thing said.
The bidding group also includes APG, China Investment Corp, Ontario Teachers’ Pension Plan Board and PSP Investments, according to the sources.
A deal could value UK Power Networks at up to £15bn (S$27.2bn) and an agreement could be reached in the coming weeks, they said.
UK Power Networks is jointly owned by the Li family’s CK Infrastructure Holdings and other group companies Power Assets Holdings and CK Asset Holdings.
Shares of CK Asset Holdings fell as much as 2.8 percent on Friday (March 4) in Hong Kong, hitting their lowest level in more than two months, according to data compiled by Bloomberg. CK Infrastructure shares climbed 1.6 percent, while Power Assets rose 1.2 percent.
Consultations are ongoing and there is no certainty they will result in an agreement, the sources said, asking not to be identified if confidential information was discussed. The deal could also attract interest from other infrastructure investors and energy companies, the sources said.
A representative for Mr. Li’s companies said the group frequently receives offers for various assets and declined to comment further. Representatives from APG, KKR, Macquarie, the Ontario Teachers’ Board and PSP declined to comment, while a spokesman for China Investment was able to comment immediately.
UK Power Networks, formerly owned by France’s Electricite de France, owns and services power cables across London and the South East and East of England, serving around 8.3 million homes. It was acquired by Mr. Li’s company in 2010.
Distribution grids are the local grids that feed directly into households and companies and put them at the center of the energy transition. Higher allocations from pension and sovereign wealth funds and investors’ desire for long-term, stable returns have made infrastructure one of the hottest sectors for business to do.
Last year, National Grid agreed to buy PPL Corp’s UK power distribution business for £7.8 billion to prepare for a low-carbon future. As part of this push, the London-listed utility intends to sell its roughly $10 billion gas transmission business, which has attracted interest from Macquarie, Bloomberg News reported.
Elsewhere, SSE has set up banks to lead the sale of minority stakes in two power grids worth more than £10billion.