EDF sells UK power network

Around 170,000 miles of electrical network covering London, the South East and eastern England was sold by France’s EDF today in a deal worth £5.8bn (€6.9bn).

The UK’s biggest electricity network is to be acquired by infrastructure fund Cheung Kong, which is controlled by Hong Kong billionaire Li Ka-shing and is the current owner of UK distribution firm Northern Gas Networks.

The deal price, which includes debt, is higher than expected after Cheung Kong and its partner Hong Kong Electric Holdings reportedly outbid funds such as the Abu Dhabi Investment Authority and Australia’s Macquarie.

Long-term investors such as pension funds are attracted to assets such as utilities and power distribution networks due to their reliable income stream. Several such companies changed hands before the credit crunch struck.

Distribution companies operate and maintain the electrical supply system in particular areas. The EDF network serves around 7.8 million customers and has 170,000 kilometres of underground cables and overhead lines and 66,300 substations.

EDF, which owns the network through its UK subsidiary EDF Energy, bought British Energy for more than £12bn (€14.3bn) last year and wants the sale to cut around €5bn from its debts by the end of 2010.

The proposed sale was announced at the same time as EDF released half-year results showing a 3.8% rise in underlying earnings to €10.37bn.

In the UK, earnings of €1.6bn were down 2.1% after cold weather and lower wholesale prices were offset by a lengthy power outage at its Sizewell B power station, which it acquired as part of the British Energy deal.

The station should be reconnected to the grid in the current quarter, later than previously planned.

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