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National Grid
Jeff Liddiard
Posted: 19 January 2018 14:15:22(UTC)

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Just been out for a walk and came across Cadent employees digging a big hole in the road and noticed signage referring to gas. I thought to myself, shouldn't NG be doing that? Googled Cadent to find the following.

The Company (formerly known as National Grid Gas Distribution Limited) was incorporated in March 2016 but only commenced trading on 1 October 2016 following the hive out of assets and liabilities relating to the gas distribution business from National Grid Gas plc ("NGG").

In November 2015, National Grid plc ("NG") announced the potential disposal of a majority stake in its gas distribution business.

The first stage of the partial divestment involved the separation of NGG’s gas distribution business from its gas transmission business by transferring all related assets and certain liabilities to National Grid Gas Distribution Limited ("NGGD", now Cadent Gas Limited) a newly created wholly owned subsidiary of National Grid Holdings One plc ("NGHO", an intermediate holding company between NG and NGG).

On 8 December 2016, NG signed an agreement with a consortium comprising Macquarie Infrastructure and Real Assets, Allianz Capital Partners, Hermes Investment Management, CIC Capital Corporation, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships (the "Consortium") for the sale of a 61 per cent equity interest in NGGD.

The sale of the Company to a newly formed holdco entity (Quadgas Holdco Limited, the "Holdco") was completed on 31 March 2017. The Holdco is jointly owned by NGHO as a minority stakeholder (39 per cent) and the Consortium (61 per cent). Consequentially, the Company, now renamed Cadent Gas Limited, and Quadgas Midco became part of a standalone structure external to National Grid’s consolidated group.

Post the completion of NG’s sale of a 61 per cent equity interest in the Company on 31 March 2017, the entity began business under a new brand, Cadent Gas Limited, on 1 May 2017. Below is a high level organizational chart:

I don't own any NG shares at the moment, but as their shares are often discussed on this forum and suggested as a good investment, could someone please tell me if investing in NG shares now is different than prior to the above change, i.e., what, if anything has changed in respect of profitability etc.
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colin overton
Posted: 19 January 2018 18:09:39(UTC)

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I don't hold utility shares myself. In a recent conversation with a friend, we reviewed 2017 and looked forward to 2018 and beyond. He does hold utility shares (can't recall which ones) principally for divs., but he felt that the spectre of The Kommissar and Friends with their neo-Trot policies of re-nationalisation had already affected prices and would weigh ever more heavily as time before the next election decreased. The future is impossible to forecast but Momentum (sic) seems to be with people who can barely count and will have little or no regard to investors. Five years is a long time to anyone who can recall the 1970s. I will not be buying any utilities.
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Alex Peard
Posted: 19 January 2018 18:32:53(UTC)

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I sold NG a couple of years ago when I needed money in my ISA to fund a rights issue in a property trust. I always intended to buy them back this year but for reasons outlined above by Colin I think there's too much risk. Wish I had also sold my United Utilities at the same time looking at their recent share price decline!
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Jeff Liddiard on 19/01/2018(UTC)
Posted: 19 January 2018 20:24:37(UTC)

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I hold NG which had a nice 2017 special dividend.

It has US operations too as a safeguard against Labour Government perhaps.

If JC arrives, it will however probably take a hit so will not increase my holding nor that

in Severn Trent which has fallen quite a bit as of late.
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william skilling
Posted: 20 January 2018 09:39:33(UTC)

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I can see where you are coming from re the marks brothers renationalise threats but I have invested in NG.for its USA side which will be around 70 percent when the put option is Exercised on the gas pipeline.
Worst case scenario is the USA side is listed in the states it would be much higher value than today.
Dennis .
Posted: 20 January 2018 10:03:48(UTC)

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I have about £15k worth of NG and have been concerned about the JC/nationalisation issues but two things have kept me in there.

1. They have a big operation in the US and according to recent reports are increasing their focus on developing that area in case of future JC issues.

2. It might be a bit premature but they will be the main beneficiaries of providing power to electric vehicles and have a natural monopoly.

The downside of NG is that the electricity network originally was designed to support a small number of very large power stations and this is changing due to wind and solar power. They will need to spend a lot of money reconfiguring the system to collect relatively small amounts of power from remote places using DC transmission. Add to this the prospect of battery storage and domestic generation from solar roof tiles which could bypass the need to connect to NG. However this is probably some time in te future.
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Mr Helpful
Posted: 20 January 2018 15:51:23(UTC)

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Dennis .;55681 wrote:

Add to this the prospect of battery storage and domestic generation from solar roof tiles which could bypass the need to connect to NG. However this is probably some time in te future.

Also wondering about this aspect.
But then there can be nights when the wind hasn't blown for a few days, and domestic/communal storage batteries might be low.
And as my son pointed out, something is going on at Hinkley Point!

NG. is, unlike the majority of Stocks reasonable value today, although not bargain basement.
If the JC threat somehow fails to materialise (don't ask how); upside potential exists.
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Posted: 20 January 2018 17:16:09(UTC)

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All the money received from the sale of the gas operations was released to shareholders as a special dividend in 2017 and the number of shares we all held was consolidated (reduced) to keep the share price at the same level as before the dividend. So shareholders didn't really benefit but the company has now disposed of assets it presumably didn't want to own.

As regards the role of NG then its remit in the UK is to plan for every day and make sure energy from hundreds of sources can be provided to meet every surge experienced during the day. balance with demand every hour of the day 365 days of the year. I don't see that role changing at all in the future.
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Dennis .
Posted: 20 January 2018 17:56:17(UTC)

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Apparently NG is currently wrestling with a problem in Scotland. It's a bit technical but basically power is transmitted from remote locations as DC to reduce losses and converted to AC using invertors. The problem is that the invertors need to synchronise with the AC mains to be in phase with it. However more and more generating capacity is being phased out in Scotland and it's possible for the grid to go down on dark windless days and if you haven't got a big AC power source (ie England) to synchronise with then you can't get it started again. I am sure it's not an insurmountable problem really but it shows that there is a need for quite a lot of investment to be able to use renewables reliably.
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Malcolm Hartney
Posted: 23 January 2018 23:17:19(UTC)

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Thanks for interesting info on NG and Cadent.
I have not noticed any significant effect on bottom line for NG share price. I remain a happy long term investor in national grid.
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