Canadian pensions in gas network megadeal

The infrastructure investment arms of Ontario Teachers’ Pension Plan and OMERS, respectively, will acquire gas distribution networks in the UK from National Grid Transco in a £3.16bn deal.

The Ontario Teachers’ Pension Plan and Borealis Infrastructure will join a consortium to acquire gas distribution networks from National Grid Transco plc, a UK company, in a deal valued at £3.16 billion ($5.7 billion).

Ontario Teachers’ and Borealis join Scottish and Southern Energy in the acquisition of networks running through Scotland and the South of England. The two Canadian institutions will comprise 50 percent of the consortium, each holding 25 percent.

The infrastructure group at Ontario Teachers’ will contribute $500 million to the deal, while Borealis Infrastructure, a division of the Ontario Municipal Employees’ Retirement System, will contribute the same amount. Both groups are distinct from direct private equity operations affiliated with the two pensions.

Commenting on the transaction in a statement, Robert Bertram, executive vice president of investments at Ontario Teachers’, said: “Most of our infrastructure investments are outside Canada because that’s where we are finding good opportunities.”

Michael Nobrega, chief executive officer of Borealis Infrastructure, said: “This is a significant milestone as OMERS begins the process of realigning its asset mix, shifting a portion of capital from publicly traded investments to infrastructure and private equity assets. . .”

The Scotland network comprises roughly 24,000 kilometers of gas mains, while the South of England network comprises 49,000 kilometers of gas mains.

Ontario Teachers’ manages roughly $60 billion in assets, while OMERS oversees $26 billion.