Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Iberdrola has won the contest to acquire UK power grid operator Electricity North West for about €5bn including debt, boosting the Spanish multinational’s presence in Britain.
Madrid-based Iberdrola on Friday said it was acquiring an 88 per cent stake in ENW from three shareholders — Equitix, KDM Power and Chinese state-backed CNIC — for an equity value of £2.1bn.
The deal will turn the UK into the Spanish group’s biggest market by regulated assets. Iberdrola, which already owns Scottish Power, saw off competition from the French utility Engie.
ENW distributes electricity to almost 5mn people in the north-west of England, including Manchester. Scottish Power, which Iberdrola acquired for £11bn in 2007, serves customers in Merseyside, north Wales and central and southern Scotland.
The deal is consistent with Iberdrola’s long-term plans to increase the size of its grid management business even as it continues to be a large generator of wind and solar power.
Iberdrola executive chair Ignacio Galán said: “This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonisation of the economy.”
He added that it was “also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations”.
Once the ENW deal is completed, the value of its regulated asset base in the UK will rise to about €14bn, exceeding the €13.3bn it has in the US, the company said.
The UK and US will together account for two-thirds of the company’s regulated assets, underlining the extent of its expansion beyond its Spanish home market.
KDM Power, a consortium led by Japan’s Kansai Electric Power, will retain a 12 per cent stake in ENW once the deal is completed.
Iberdrola is one of the world’s largest wind and solar power developers and network owners, with about 43.4GW of renewable projects up and running globally.
In March it set out plans to put about 60 per cent of its global investment over the next three years into electricity grids, as it meets growing demand for the networks alongside the growth of wind and solar power.
The deal marks further consolidation in the UK networks sector after FTSE 100 company National Grid paid £7.8bn to buy Western Power Distribution from the US’s PPL in 2021.
They and other network owners, such as Berkshire Hathaway’s Northern Powergrid and CK Group’s UK Power Networks, will need to invest heavily in the coming years to make sure the networks can cope with the rise in electric cars, heat pumps and renewable electricity under the country’s shift towards a lower carbon energy system.
BNP and Barclays advised Iberdrola. Jefferies advised the sellers.
Additional reporting by Gillian Plimmer
