Iberdrola to buy 88% stake in Electricity North West

Iberdrola has signed an agreement to acquire an 88% stake in Electricity North West (ENW) for an equity value of £2.1 billion. 

The Spanish energy company has recently been targeting strategic investments in electricity networks within highly rated credit nations, with the UK being a primary destination. In fact, the UK market is now the most significant for Iberdrola by regulated asset base, estimated at €14 billion, surpassing even the United States at €13.3 billion.

The agreement to buy an 88% stake in Electricity North West values the distribution network operator at around €5 billion, and will further bolster Iberdrola’s presence in the UK, which includes ownership of ScottishPower, a company that it has held since 2007. 

Electricity North West, positioned between ScottishPower’s existing networks in central and southern Scotland and Merseyside and North Wales, distributes electricity to nearly five million people across key locations such as Manchester, Lancaster, and Barrow. It manages about 60,000 km of electricity distribution networks.

Electricity North West will join together Iberdrola's two other distribution network operators in the UK.

With this acquisition, Iberdrola will become the second-largest electricity network operator in the UK, serving roughly 12 million people and managing a network exceeding 170,000 kilometers. The company's UK workforce will also expand to more than 8,500.

Ignacio Galán, Iberdrola’s Executive Chairman, noted, "This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonization of the economy. The agreement is also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations. As a result of this acquisition, our regulated networks asset base in the UK is now valued at €14 billion. When combined with the US, these two markets now represent two-thirds of our total global regulated asset base.”

Additionally, Iberdrola and a consortium of Japanese investors led by Kansai will collaborate long-term, with the latter retaining a 12% stake in Electricity North West. 

This is all predicated on regulatory approval for the deal, of course, although that is likely to be just a formality given other moves that have taken place in the electricity market in recent years, such as National Grid’s acquisition Western Power Distribution in 2021.