Bids for National Grid U.K. Gas Network Said to Be Due on Friday

(Bloomberg) -- First-round bids for the sale of a controlling stake in National Grid Plc’s U.K. gas distribution business are due tomorrow, according to a person with knowledge of the matter.

National Grid is selling at least 51 percent of its gas distribution units, made up of four regional networks with a total worth of as much as 12.6 billion pounds ($16.5 billion), RBC Capital Markets said Thursday in a note to clients. The company plans to return the proceeds of the sale to shareholders, at a value of 90 pence to 140 pence a share, according to the bank.

Canada Pension Plan Investment Board may join a consortium of Canadian investors and Middle Eastern sovereign wealth funds interested in the assets, people with knowledge of the matter said in August. Another group including Allianz SE, Australian investment bank Macquarie Group Ltd. and Amber Infrastructure Group may also bid.

Selling the stake in the regional gas business, which serves almost 11 million customers, will allow National Grid to increase its dividend by at least the rate of the Retail Price Index for the foreseeable future, the company said in November. It will also allow help the company meet annual asset growth targets of 5 to 7 percent, most of which come from its U.S. business, it said.

The FT reported Thursday that Li Ka-shing is assembling a bid via a consortium led by Cheung Kong Infrastucture. National Grid spokesman Sean Kemp declined to comment on potential bidders.

National Grid shares rose 2.2 percent to 1,081 pence at 2:10 p.m. in London on Thursday. The stock has gained 15 percent this year.

The sale is expected to be completed early next year.