SSE to sell 25% stake in electricity transmission business for £1.5bn
SSE (SSE.L) has agreed to sell a 25% stake in its electricity transmission arm to a Canadian pension fund for £1.5bn ($1.8bn).
The deal with Ontario Teachers’ Pension Plan Board, which will kick off early next year, is set to “help unlock significant growth” in SSEN Transmission, and SSE as a whole, the company said.
The transmission business operates under its licensed entity Scottish Hydro Electric Transmission, which helps transport renewable resources from the north of Scotland to areas further south.
The group also confirmed that a new £750m credit facility had been set up to help the firm’s long-term funding requirements.
The business will be chaired by Gregor Alexander, finance director of SSE, with Ontario Teachers’ getting a proportional representation on the board.
“We are delighted to agree a transaction that will help unlock the full potential of our growing electricity transmission business, which remains core to our strategic direction as a clean energy champion specialising in electricity infrastructure,” Alexander said.
“As we set out in our Net Zero Acceleration Programme last year, due to the scale of potential growth and the associated investment required across SSE’s businesses, including in electricity networks, bringing in minority partners will balance capital allocation and support further growth, creating greater long-term value for all our stakeholders.
“In Ontario Teachers’ we have a strong long-term partner who we have worked with successfully over the past 18 years and, whilst we will retain operational control, they will be critical to SSEN Transmission’s ongoing future success.”
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It comes after SSE rejected proposals from activist investor Elliott Investment Management to split the company in two by separating the renewables arm.
Shares rose 0.6% in London on the back of the news as the deal could help offset some of the pressures from the increased windfall energy tax from 25% to 35%.
SEN Transmission reported adjusted operating profit up 72% to £380m in the year to 31 March with gross assets of £4.72bn.
Charles Thomazi, head of EMEA infrastructure & natural resources at Ontario Teachers’, said: “SSEN Transmission is one of Europe’s fastest growing transmission networks.
“Its network stretches across some of the most challenging terrain in Scotland — from the North Sea and across the Highlands — to deliver safe, reliable, renewable energy to demand centres across the UK.”
