International Public Partnerships Regulatory News (INPP)

8 December 2016

Consortium TO ACQUIRE 61% INTEREST IN national grid GAS distRibution

International Public Partnerships Limited, the listed infrastructure investment company (the 'Company', 'INPP'), is pleased to announce that it is part of the Quad Gas Group consortium that has agreed to acquire a 61% interest in National Grid's gas distribution network ('GDN').

The Company expects to invest up to £275 million, with the remaining risk capital funded by the other consortium partners who include other leading UK and international institutional investors, including: Allianz Capital Partners, Dalmore Capital Limited, Macquarie Infrastructure and Real Assets, CIC Capital Corporation, Hermes Investment Management and Qatar Investment Authority (together, the "Consortium").

The GDNs are well-established, predictable, and strongly cash yielding businesses whose characteristics are consistent with and complementary to other regulated and non-regulated assets in the Company's portfolio. These characteristics include:

· Stable, RPI-linked revenues deriving from a regulated asset base with long-term cashflows expected to enhance the degree of inflation linkage inherent in the Company's overall portfolio;

· The GDNs are critical elements of the UK's infrastructure base;

· Confidence in a proven, well-established, highly stable and transparent regulatory regime overseen by Ofgem;

· A mature underlying asset base with an established operating history and no exposure to commodity or consumer demand risk; and

· The GDNs come with an experienced management team and a strong partner in National Grid for its remaining 39% interest.

INPP's investment in the GDN companies strengthens the Company's focus on originating regulated assets which deliver long-term, sustainable, inflation-linked revenues. This began with INPP's ongoing investment programme since 2011 in the offshore transmission (OFTO) sector and has continued with INPP's investment into the Tideway Tunnel project in 2015. Both of these primary assets operate in an established, highly-respected and predictable regulatory regime, overseen by Ofgem and Ofwat, respectively. Since privatisation in the 1980s, the GDN network has been owned by National Grid.

The Company expects base case returns from this investment at levels which are consistent with its other regulated investments.

The Consortium will now work with National Grid and other stakeholders to complete the regulatory process necessary to reach Financial Close, expected to be towards the end of Q1 2017. Further details of INPP's investment will be provided at that time.

Rupert Dorey, Chairman of International Public Partnership said: "INPP's participation in the consortium to acquire National Grid's gas distribution business offers the Company additional opportunities for highly attractive risk-adjusted returns with strong inflation protection to compliment those it already generates from its existing portfolio. The acquisition is fully in line with our strategy to strengthen the quality of our portfolio and enhance further the inflation protection it continues to offer." 

For further information:  

Erica Sibree +44 (0)20 7939 0558

Amber Fund Management Limited

Nick Westlake/Hugh Jonathan +44 (0)20 7260 1345/1263

Numis Securities

Ed Berry/Mitch Barltrop +44 (0)20 3727 1046/1039FTI Consulting

Notes to Editors:

About Quad Investments

The consortium is made up of Allianz Capital Partners, Amber Infrastructure, CIC Capital Corporation, Dalmore Capital, Hermes Investment Management, Macquarie Infrastructure and Real Assets (MIRA), and Qatar Investment Authority.

Following acquisition, the business will have the following ownership structure:

· National Grid 39.0%

· Quad Gas Group

o MIRA 14.5%

o CIC Capital 10.5%

o ACP 10.2%

o Hermes 8.5%

o QIA 8.5%

o Amber/INPP 4.4%

o Dalmore Capital 4.4%

Total 100.0%

The Consortium consists of long term investors in the UK's critical infrastructure with a track record of delivering reliable services and operational outperformance in regulated industries - they have proven operational excellence, as well as financial scale.

Individually they have invested in a multitude of global projects in the regulated asset environment, including numerous gas assets such as Open Grid Europe, Gassled and NET4GAS, Czech Gas Networks, Thyssengas, Wales & West Utilities, and have a successful track record of investing in the UK's largest critical infrastructure investments, including Tideway Tunnel, Heathrow, Thames Water and Porterbrook.

About the Gas Distribution Networks:

National Grid has agreed a sale of a 61% shareholding in its gas distribution network which consists of four of the eight UK regional GDN companies which deliver gas from the high pressure transmission network (also owned by National Grid) across the East of England, North London, the North West and the West Midlands. The four GDNs, the subject of this transaction, distribute gas to approximately half of the country's connected households serving 11 million customers across a network of 131,000km of gas pipeline. As noted above these GDNs are regulated by Ofgem, the UK's gas and electricity regulator.

About International Public Partnerships:

International Public Partnerships ('INPP') is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships ('PPP'), private finance initiative ('PFI'), regulated asset and other similar procurement methods.

Listed in 2006, INPP is a long-term investor in 126 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and utility and transmission projects in the UK, Europe, Australia and North America. INPP seeks to provide its shareholders with both a long-term yield and capital growth through investment across both construction and operational phases typically of 25-40 year concessions.

Amber Infrastructure Group ('Amber') is the Investment Advisor to INPP and has around 90 dedicated staff who manage, advise on and originate projects for INPP.

Visit the INPP website at www.internationalpublicpartnerships.com for more information.

About Amber Infrastructure Group:  

Amber is a leading international infrastructure specialist, providing asset management and investment advisory services in respect of over £6 billion of assets in the UK, Europe, Australia and North America. Amber's core business focuses on sourcing, developing, advising on, investing in and managing infrastructure assets within the utilities, PPP, transport, renewable energy and regeneration sectors.

Amber provides investment advisory services to International Public PartnershipsLimited as well as private investment funds, specialising in urban regeneration. Amber is headquartered in London with offices in Munich, Sydney, Melbourne and San Francisco and employs over 90 people, making it one of the largest international infrastructure specialists.

About Allianz / Allianz Capital Partners:

Allianz represents one of the world's strongest financial communities, offering a broad range of insurance and asset management services. In 2015, Allianz employed around 142,000 staff in some 70 countries and achieved total revenues of 125.2 billion euros and an operating profit of 10.7 billion euros. Allianz Group managed an investment portfolio of around 640 billion euros. Additionally our asset managers Allianz GI and PIMCO managed 1.3 trillion euros of third party money. Allianz is active in a wide variety of sectors including real estate, infrastructure, renewable energy and equity and debt. Allianz's long-term value strategies maximize risk-adjusted returns.

Allianz Capital Partners is the Allianz Group's in-house investment manager for alternative investments. With offices in Munich, London, New York and Singapore Allianz Capital Partners manages more than EUR 16 billion of alternative assets. The investment focus is on infrastructure, renewables as well as private equity funds. ACP's investment strategy is targeted to generate attractive, long-term and stable returns while diversifying the overall investment portfolio for the Allianz Group insurance companies.

Allianz was part of the consortium investing alongside INPP in the Tideway Tunnel project.

About Dalmore Capital Limited:

Dalmore Capital Limited ('Dalmore') is an independent UK fund manager currently managing over £2.0 billion for institutional investors across eleven investment vehicles including discretionary-managed funds, co-investment accounts and single account mandates. Dalmore has offices in London and Edinburgh and invests in lower risk UK infrastructure, in both greenfield and brownfield assets.

In 2014, Dalmore was appointed as discretionary manager for the Pensions Infrastructure Platform, a £535 million fund established for long-term investment in operational UK infrastructure assets, targeting yielding assets with inflation-linked returns.

For the Tideway Tunnel project, Dalmore established a single purpose fund which secured £440 million of commitments, primarily from leading UK pension funds, to fund its investment and will establish a similar single-purpose fund for the purpose of investing in the GDNs.

About CIC Capital Corporation:CIC Capital Corporation, a wholly-owned direct subsidiary of China Investment Corporation (CIC), was incorporated in January 2015 with a mandate to specialise in making direct investments to refine CIC's overall portfolio management and enhance investment on long-term assets. As CIC's direct investment arm, CIC Capital is mandated to make direct investments and manage bilateral, multilateral and platform fund investments to maximize returns and promote international investment cooperation. CIC Capital is a market-oriented commercial entity with a global reach.

About Hermes Investment Management:

Hermes is focused on delivering superior, sustainable, risk adjusted returns for our clients - responsibly. Our goal is to help people invest better, retire better and create a better society for all.Hermes manages assets on behalf of more than 330 clients* across equities, fixed income, alternatives and real estate, with £28.6 billion* assets under management. In Hermes EOS, we have the industry's leading engagement resource, advising on £237 billion* of assets.

*Please note the total AUM figure includes £5.4billion of assets managed or under an advisory agreement by Hermes GPE LLP ("HGPE"), a joint venture between Hermes Fund Managers Limited ("HFM") and GPE Partner Limited. HGPE is an independent entity and not part of the Hermes group. £0.2billion of total group AUM figure represents HFM mandates under advice. Source: Hermes as at 30 September 2016.

About Macquarie Infrastructure and Real Assets: 

Macquarie Infrastructure and Real Assets ('MIRA'), a division of the Macquarie group of companies, is the world's largest infrastructure manager with over £70 billion in infrastructure assets under management across 27 countries and approximately 400 employees globally. In total MIRA has approximately 115 infrastructure assets including more than 40 utilities and energy related companies under management through a range of listed and unlisted vehicles globally.

In Europe, MIRAEL has to date raised and invested through five dedicated European infrastructure funds with equity capital of over €14 billion.

About Qatar Investment Authority:

Qatar Investment Authority ('QIA') is the sovereign wealth fund of the State of Qatar. QIA was founded in 2005 to strengthen the country's economy by diversifying into new asset classes. Building on the heritage of Qatar investments dating back more than three decades, its growing portfolio of long-term investments help complement the state's huge wealth in natural resources

Headquartered in Doha, and with a subsidiary in New York (QIA Advisory), QIA is structured to operate at the very highest levels of global investing. As a world class investor, QIA adheres to the strictest financial and commercial disciplines

It has a strong track record of investing in infrastructure and in the UK as well as in different asset classes, including listed securities, property, alternative assets and private equity in all the major capital markets as well as the newer emerging markets