Consortium Including Ontario Teachers’ Pension Plan Board Agrees to Acquire 50% Stake in SGN
Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced that it is participating in a consortium with Brookfield Super-Core Infrastructure Partners (“Brookfield”) which has agreed to acquire a 50% stake in Scotia Gas Networks Ltd (“SGN”). As part of the transaction, Ontario Teachers’, an existing SGN shareholder, will acquire an additional 12.5% in SGN and Brookfield will acquire a 37.5% stake in SGN. StepStone clients are participating in both the Brookfield and Ontario Teachers’ investments.
The consortium is acquiring the 33.3% stake in SGN owned by SSE and the 16.7% stake owned by the Abu Dhabi Investment Authority (ADIA). Following the close of the transaction, SGN’s direct shareholders will comprise Ontario Teachers’ (37.5%), Brookfield (37.5%) and OMERS Infrastructure (25%).
SGN is the second largest gas distribution network in the UK and is pioneering the repurposing of existing gas networks into renewable hydrogen energy systems. SGN has committed to achieve a net zero climate impact by 2045 and is taking a leadership role in supporting the transition to a hydrogen economy.
Nick Jansa, Senior Managing Director for Europe, the Middle East and Africa of Ontario Teachers’ said:
“Our increased investment in SGN further reflects our commitment to support and capitalize on opportunities created by the transition to a net-zero emissions economy. This investment can contribute to the financial security of our members while also supporting a critical infrastructure asset that will require additional capital to help it transform for a low-carbon future. SGN is well-positioned to play a leading role in helping the UK to transition away from fossil fuels and achieve the nation’s net-zero goal. We look forward to working with our fellow shareholders to support SGN on its journey to create an affordable and sustainable heat and energy network for homes and businesses in the UK.”
Natural gas networks will play an important role in the transition of the energy sector to a net zero future to meet the ambitious carbon emissions targets set by the UK and Scottish governments for 2050 and 2045, respectively. For more information on how SGN is helping to decarbonize the UK’s gas network, visit the SGN website here.
About Ontario Teachers’ Pension Plan Board
Ontario Teachers' Pension Plan Board (Ontario Teachers') is the administrator of Canada's largest single-profession pension plan, with C$221.2 billion in net assets (all figures at December 31, 2020). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.6% since the plan's founding in 1990. Ontario Teachers' is an independent organization headquartered in Toronto. Its Asia-Pacific region offices are located in Hong Kong and Singapore, and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario's 331,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
SGN is the second largest UK gas distribution network (‘GDN’) in the UK and owns Scotland Gas Networks plc and Southern Gas Networks plc, two of the eight regulated gas distribution networks in England, Wales and Scotland, operating under a license from Ofgem to distribute gas through their infrastructure network. SGN Natural Gas Ltd provides gas to customers in the west of Northern Ireland. SGN also includes other non-regulated ancillary businesses relating to metering, real estate development, heat networks and renewables amongst others. The derived EBITDA from these non-regulated activities in the year to 31 March 2021 was £21m.
SGN is a leader in the development and use of green hydrogen for heating and is delivering a suite of innovative projects that will help to make hydrogen the backbone of the UK’s future gas network. SGN plans to repurpose its existing gas network for Scotland’s north-east and central belt, as well as its network across southern and south east England, into 100% renewable energy systems, primarily through the use of hydrogen. By 2023, SGN's pioneering H100 Fife project in Scotland aims to put several hundred customers on to its network using hydrogen; this is the neighbourhood part of the UK government's hydrogen programme.
In addition to working to decarbonise the UK’s gas network, SGN is reducing the environmental impact from its own operations and is targeting a net-zero carbon footprint by 2045. Its key initiatives include reducing leakage from its network pipes, using 100% renewable energy and rolling out zero-emission vehicles.