EDF ponders UK grid sale(2)

The French energy giant said it is considering selling its UK electricity distribution business in order to reduce its debt level by €5bn. The grid serves the London, the South-East and East region of the UK, supplying around eight million households.

French energy group Electricité de France (EDF) is looking to sell its UK electricity distribution business in order to reduce its debt by €5 billion ($7.3 billion).

EDF subsidiary EDF Energy is the largest electricity distribution operator in the UK, controlling 100,000 miles of cable across the populous London, South-East and East regions of the country. The network supplies around eight million homes and has a staff of roughly 5,000.

EDF said this morning it is “initiating a process to evaluate ownership options” of its UK grid in line with its previously announced intention to lower its level of debt. EDF Energy CEO Vincent Rivaz praised the quality of the asset, commenting: “This unique combination of three regulated networks covers a key region vital to the UK economy. It has a highly experienced and skilled workforce which has a strong track record of delivery and is well placed for growth.”

EDF said in a statement this evaluation process “logically follows” its acquisition of electricity generation business British Energy last year for £12 billion (€13 billion; $19 billion). EDF has plans in place to develop four new nuclear reactors in the UK, which will add to the eight operational nuclear stations it acquired as part of the British Energy deal.

Potential bidders rumoured to be interested in the distribution business at this stage include Abu Dhabi Investment Authority, Cheung Kong Infrastructure, Global Infrastructure Partners, Morgan Stanley Infrastructure and pension funds Borealis, Ontario Teachers and Canadian Pension Plan. National Grid and Scottish & Southern are also rumoured to have shown an interest in the grid.

Barclays Capital and Deutsche Bank have been mandated to advise on the potential sale. BNP Paribus is also to provide addition support in the process. Any potential deal could take place early next year.