Exclusive-Iberdrola seeks UK smart meter unit sale, sources say

11:35 am Thursday, December 12th, 2024

By Andres Gonzalez

LONDON (Reuters) -Spanish utility Iberdrola aims to sell its smart metering business in the UK and has lined up advisers, according to three sources with knowledge of the situation, as it seeks to capitalise on increased investor interest in the sector.

Iberdrola is looking to raise around 1 billion pounds ($1.27 billion), one of the people said.

The sources, speaking on condition of anonymity as the deal is private, cautioned that the sale process is at an early stage and no deal is guaranteed. They also said Iberdrola is working with RBC as adviser on the deal.

Iberdrola and RBC declined to comment.

The company in October made public a 24 billion-pound investment plan for its British arm Scottish Power until 2028, of which around two thirds would be for power transmission and distribution networks.

One of the three sources said any proceeds from selling the smart metering business would help to finance the investment plan.

According to the 2023 accounts published on its website, ScottishPower manages more than 2.5 million smart meters through its unit SP Smart Meter Assets Limited.

At the end of September, 37 million smart and advanced meters had been installed in homes and small business across Great Britain, according to the UK’s Department for Energy Security & Net Zero.

As the take-up of smart meters increases, interest from infrastructure funds in the sector has increased.

Earlier this month, private equity firm EQT and Singapore’s sovereign wealth fund GIC acquired a majority stake in smart metering provider Calisen, while Arcus’ Horizon Energy Infrastructure merged with KKR’s Smart Metering Systems (SMS).

Smart meters provide real-time information about electricity consumption for households and suppliers, helping them to save money.

In August, Iberdrola agreed to purchase a majority stake in British power network Electricity North West (ENWL), in a deal that valued the company at approximately 5 billion euros, expanding the Spanish group’s operations in Britain.

As the renewable sector has struggled with high interest rates and costs associated with debt, Iberdrola has sharpened its focus on upgrading and expanding power grids, such as those controlled by ENWL, which offer steady and predictable returns.

($1 = 0.7845 pounds)

(Reporting by Andres Gonzalez, editing by Anousha Sakoui, Elaine Hardcastle and Barbara Lewis)