British energy supplier SSE said it agreed to sell off a portion of its regional gas distribution business to an Abu Dhabi investment entity.
For nearly $775 million, the country's second-largest energy supplier said it agreed to sell the Abu Dhabi Investment Authority a 16.7 percent stake in gas distributor Scotia Gas Networks. SSE Chief Executive Alistair Phillips-Davies said the divestment would return value to shareholders while supporting long-term growth.
The Abu Dhabi investor had no statement on the acquisition. In an annual letter from July, it said prudence would steer its activities as the global economy, the energy sector in particular, shows slow growth. Any forward momentum, the company said, must come from the realization that extraction of basic commodity resources alone won't suffice. Moving into distribution and refining may help drive gains through diversification, it said.
SSE pointed to upbeat forecasts from Moody's Investors Service, which it said kept a strong credit rating for the company. SSE said in April its credit outlook switched from negative to stable, which it said reflected its resilience in a downturned energy market.
The divestment for SSE follows mounting industry challenges in the British market. Rival utility company Centrica reported a demanding first half of the year. The company said its energy accounts from the British economy were down 3 percent because the industry has become more competitive.
Smaller companies are taking on more consumers in the British economy. For Centrica, that meant a 14 percent drop in adjusted earnings.
SSE keeps a 33.3 percent stake in regional operations and holds a key stake in five energy networks that distribute gas to almost 6 million properties in Scotland
