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Sale of U.S. utility PPL's British unit faces delay as Brexit looms - sources

11/25/2020 | 12:18pm

LONDON/FRANKFURT (Reuters) - The sale of British power utility Western Power Distribution (WPD) faces delays to at least the first quarter of 2021, partly due to uncertainty over whether Britain will leave the European Union without a trade deal, sources close to the matter said.

Current owner U.S. utility PPL Corp in August launched the sale of WPD, which has a regulatory asset value of 7.7 billion pounds ($10.1 billion) with the help of U.S. investment bank JP Morgan , to focus on its U.S. operations.

Based on its earnings before interest, taxes, depreciation and amortization (EBITDA) at 1.25 billion pounds ($1.67 billion) for the financial year ended in March, WPD could fetch a valuation of up to 12 billion pounds.

Despite PPL's gauging the interest of European utilities and investment funds, the power group has attracted just a small number of potential bidders, the sources said.

The next regulatory regime for Britain's networks, which sets fixed investment returns for grid owners and will only be decided in 2021, has refrained some companies from expressing their interest, the sources said.

Two consortia are now left in the race, they said.

Investment and pension funds Global Infrastructure Partners, Brookfield Asset Management and CDPQ formed one, while the infrastructure investment arm of Australia's Macquarie Group joined forces with Canada's PSP Investments and Dutch pension fund APG, the sources said.

PPL, Macquarie, CDPQ and Brookfield declined to comment. GIP, PSP and APG did not immediately reply to a request for comment.

However, as Britain and the EU are in a last-ditch effort to agree terms to keep trade flowing without tariffs or quotas from the start of 2021, the sale has now stalled and will likely run into the first few months of next year, the sources said.

WPD delivers electricity to about 8 million customers across central and southwest England, and south Wales, according to its website.

($1 = 0.7472 pounds)

(Reporting by Clara Denina and Arno Schuetze; Editing by Lisa Shumaker)

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