Macquarie’s role in UK gas network should ‘concern’ government, MP warns
Macquarie’s growing role in the country’s gas network has raised the concerns of the chair of an influential Westminster committee, after an investor consortium led by the Australian asset manager raised its stake in National Gas last week.
Angus MacNeil, chair of the energy security and net zero committee and independent MP for Na h-Eileanan an Iar, told City PM its near-complete takeover of National Grid’s gas business could spell trouble.
“There is an obvious concern that Macquarie will do in gas networks what they have done in the likes of Thames Water, they will fillet the company, add on debt for bonuses and dividends for themselves. It is quite concerning this model of capitalism, as we have seen in water continues into energy,” he said.
National Gas is the group, formerly owned and spun off by National Grid, which operates the UK’s 4,700 miles of gas transmission pipes, which transport supplies at high pressure around the country.
National Grid sold a controlling 60 per cent stake in the fossil fuel arm to a consortium overseen by Macquarie for £4.2bn in March 2022, with options to complete a full-scale takeover.
Now, Macquarie has snapped up an additional 20 per cent in the gas business, alongside British Columbia Investment Management Corporation – on equivalent financial terms to the original acquisition, making the latest transaction worth around £700m.
This is still subject to the National Security Investment Act, but ministers greenlit the initial 60 per cent stake in January earlier this year.
Macquarie is a major global infrastructure investor and its British portfolio currently includes a majority stake in troubled utility Southern Water, and regional transmission network Cadent Gas.
However, the deal has attracted criticism following Thames Water’s latest travails, with the UK’s largest water supplier scrambling to shore up funds to maintain operations and tame a £14bn debt pile.
When Thames Water was under a Macquarie consortium-led ownership from 2006 to 2017 its debts rose from £3.4bn to £10.8bn, while forking out £1.1bn in dividends to shareholders.
Trade union GMB said last week that Macquarie’s “stranglehold” on the business “should send alarm bells ringing”.
Macquarie argues it supported £11bn of investment during its part-ownership via the company’s managed funds, while doubling its regulated asset base from £6bn to £13bn – although this was partly funded by additional debt.
Martin Bradley, Macquarie’s head of infrastructure for Europe, the Middle East and Africa, said: “As a long-term investor in infrastructure, we are focused on making the businesses in which we invest effective and sustainable during our ownership while preparing them for continued success.
“We have overseen a step-change in investment at Cadent since investing in the business in 2017, and are backing significant investment at National Gas over the coming years to maintain a secure energy supply and prepare the network for net zero.”
National Grid and the government have been approached for comment.