Naturgy, Nortegas y MRG abren sus redes a socios

Spain's gas distribution network owners, including CPPIB, USS, ATP, Gingko Tree, and PGGM, are reopening corporate operation windows in the sector, a long-awaited move. The map of the Spanish gas distribution networks, now controlled by four major companies—Nedgia (Naturgy), Nortegas, Madrileña Red de Gas (MRG), and Redexis—is set to undergo what could be a historic reconfiguration.

Foreign investment funds, largely the owners of these networks, are exploring various corporate operations, from selling their stakes to mergers. Collectively, this could result in deals worth 15 billion euros, marking the largest transformation of the Spanish gas sector since 2015-2018. At that time, multiple corporate operations cascaded across the industry, with Naturgy investing in CPPIB's 12% stake and Allianz Investment's 8% in its subsidiary, Nedgia.

JPMorgan acquired the majority of Nortegas, while Chinese investment firm Gingko Tree Investment, Dutch pension fund PGGM, and French utility EDF bought MRG from Morgan Stanley. Goldman Sachs sold Redexis to Danish firm ATP, British firm USS, and Chinese firms CNIC and Guoxin Guotong. Recent developments have reignited the sector's activity, driven by the approval of Spain's new gas network regulation, the "third regulatory period," which sets stable and transparent peages for these networks between 2027 and 2031.

This regulatory certainty offers a compelling argument for network sales. Additionally, there is a strong appetite for investment banking operations as the 2026 window opens. The involvement of CPPIB in considering the sale of its 12% stake in Nedgia could trigger further activity, potentially leading to a 2,000 million euro starting point for valuations.

Deutsche Bank is reviving efforts to find buyers for stakeholders of Redexis, with BNP also searching for opportunities. While Nortegas remains the most sought-after distributor, the process of consolidating the sector is relatively straightforward from a competition regulation perspective, given the significant gaps between the leaders and the other players.

The regulators' main concern is that gas distributors do not exceed certain leverage thresholds, a challenge that Madrileña Red de Gas has faced with the CNMC in the past. Ultimately, these companies, despite being highly regulated, rely heavily on fixed peages set by law, which are crucial to their financial stability and the security of the energy supply. Any government can veto such operations, emphasizing the importance of the sector's stability.