Gas Natural Fenosa sells 20% stake in distribution unit

Spanish gas company Gas Natural Fenosa (GNF) has sold a 20% stake in its natural gas distribution business, GNDB, to a consortium of infrastructure investors for €1.5 billion ($1.77 billion) in cash, Kallanish Energy learns.

Buyers Allianz Capital Partners and Canada Pension Plan Investment Board see in the proposed acquisition an “attractive” opportunity for their clients, in line with their strategy to invest in “core” infrastructure assets.

GNDB is the largest gas distribution network in Spain with over 5.3 million connection points, with a total value of €13.93 billion ($16.40 billion). GNF will remain the company’s controlling stakeholder with an 80% share once the deal is cleared by regulators.

Cash from the sale will be used to support existing projects, while any surplus will be used on future investments, debt optimization or shareholder remunerations, as may be decided by the GNF board.

As part of the deal, GNF will enter into a long-term intra-group financing agreement totaling €6 billion ($7.07 billion) with GNDB that “will not affect the capital structure of GNF or its rating,” the company said.

“GNDB is a ‘premium’ asset in the Spanish gas sector and an essential part of our investment strategy,” said GNF CEO Rafael Marco. “We will continue to invest in greater expansion for the gas network in Spain, maintaining high operational effectiveness and customer service quality.”

The firm added increased gas penetration in Spain should also support the growing demand for gas, as well as greater use of regasification and transport infrastructures.

GNF was advised in the deal by JP Morgan and Morgan Stanley.