The transaction concludes SSE s £2bn-plus disposals programme announced in June 2020.
The group’s finance director Gregor Alexander said the gas operation had become a "purely financial investment" as it focuses further on its core business of low-carbon electricity.
The latest deal will see SSE sell its stake in SGN to a consortium comprising existing SGN shareholder Ontario Teachers' Pension Plan Board and Brookfield Super-Core Infrastructure Partners. In total, Ontario Teachers’ will acquire an additional 12.5 per cent of SGN and Brookfield will buy a 37.5 per cent share. The sale is expected to complete later this year and is subject to regulatory approval.
SSE initially bought a 50 per cent stake in SGN, which supplies gas to customers in Scotland, England and Northern Ireland, in 2005 for £505 million, before selling a 16.7 per cent stake to a subsidiary of the Abu Dhabi Investment Authority 11 years later. The consortium has also agreed to acquire this 16.7 per cent stake.
"The disposal proceeds will reduce net debt in the short term and will help support the delivery of SSE’s capital investment plans. As indicated in May, SSE will provide an update on these plans at its interim results in November,” the Perth-based group said.
It also said it has now secured proceeds of more than £2.7bn by offloading non-core assets, enabling it to increase investment elsewhere in the business. “The programme has realised significant value from non-core assets while intensifying SSE’s strategic focus on its core low-carbon electricity businesses and the transition to net zero.”
Mr Alexander said: “SGN has been a hugely successful investment for SSE during the past 16 years. It is a strong business delivering consistently for customers and will have a key role to play in the future development of the hydrogen economy.
"However, it has become purely a financial investment for SSE as we have sharpened our focus on our low-carbon electricity core, and it is therefore the right time for SGN to continue to thrive under new ownership.
“We see significant growth opportunities in our core networks and renewables businesses in the transition to net zero and the capital we are releasing through our disposals programme will help enable us to maximise the delivery of our low-carbon electricity orientated strategy and ultimately create sustainable long-term value for customers, shareholders and society.
"Completion of our disposals programme will leave SSE more streamlined and strategically aligned than ever before, with a business mix that is very deliberate, highly effective, fully focused and well set to prosper on the journey to net zero and beyond.”
SSE, in a trading update in July coinciding with its annual shareholder meeting, flagged good progress on its disposals programme, . Bosses also noted that construction continued to progress on major projects in transmission and renewables, including building the world’s largest offshore wind farm at Dogger Bank.