CKI and HK Electric have signed an agreement to spend approximately GBP75m to increase their investment in NGN. Following completion, CKI and HK Electric’s combined stake in NGN will be increased from around 75.1% to around 88.4%.
The consideration for the 7.1% shareholding to be acquired by CKI is approximately GBP40m. For HK Electric’s 6.2% shareholding, the consideration is approximately GBP35m.
Prior to the transaction, CKI and HK Electric owned approximately 40% and 35.1% interests in NGN respectively. Upon completion, CKI will have a shareholding of approximately 47.1%, while HK Electric will have around 41.3% shareholding.
H L Kam, group managing director of CKI, said: “Given that NGN has an equivalent enterprise value of approximately GBP1.6 billion (over HK$20 billion), the 13% increase in CKI/ HK Electric’s joint shareholding is a good strategic investment.
“This quality and secure investment of CKI is poised to: improve our recurring income with an earnings accretive business that generates a mid-teens return on investment; strengthen our business in regulated industries in the United Kingdom; and increase our asset base.”
K S Tso, group managing director of HK Electric, said: “HK Electric is committed to strengthening its portfolio of international investments and boosting its earnings mix from outside of Hong Kong. Following the acquisition of interests in three power plants in Mainland China earlier this year, this increased interest in the UK further strengthens our expanding international portfolio. We will continue to seek more acquisition opportunities in the global arena.”
NGN is responsible for distributing gas to businesses and homes across the North of England. NGN’s area covers around 6.7 million inhabitants and has approximately 2.5 million customers.
